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Last Updated: Wednesday, 18 October 2006, 05:24 GMT 06:24 UK
Competition erodes Intel profits
Paul Otellini, Intel chief executive
Intel's boss is excited about his product pipeline
Aggressive price cuts hurt chipmaker Intel's profits in the third quarter as it sought to fend off competition from rival Advanced Micro Devices.

The firm's profits fell 35% to $1.3bn (694m) in the three months to September as sales fell 12% to $8.7bn.

Despite the twin decline, performance was still ahead of market expectations and Intel shares traded broadly flat.

The firm is trying to boost efficiency as it seeks to recover market share, and is planning to cut 10,000 jobs.

Record shipments

Costs associated with this restructuring and a write-down of the value of old micro processing technology hit its performance over the period.

But the firm said it expected revenues to be higher at between $9.1bn and $9.7bn in the final three months of the year.

"We are pleased with the results, with record mobile and server processor shipments, strong manufacturing execution and industry acclaim for our new products," said chief executive Paul Otellini.

In other earnings news, IBM reported a 47% increase in third-quarter profits to $2.2bn as sales rose 5% to $22.6bn.

IBM, which sold its PC manufacturing arm to China's Lenovo last year, saw strong growth in its software and business services operations.

"Our strong performance is the result of excellent execution and the repositioning of IBM's business model to capture the growth and profit areas of a rapidly changing IT industry," said chief executive Samuel Palmisano.

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