Intel profits tumble

The world's biggest computer chip maker, Intel, has reported a 77% fall in profits.

Our volumes in the third quarter were up versus the second quarter in all our segments: Processors, chip sets, motherboards, flash memory, communication products, networking products

Maria Marced
Intel

Weak PC sales, the global economic slowdown and weak consumer confidence hit sales between July and September, the company said.

But Intel stuck by earlier sales forecast for the last three months of the year of $6.2-6.8bn.

"We're predicting quite flat revenues [in the fourth quarter] versus the third quarter," Maria Marced, vice president and general manager for Intel Europe, Middle East and Africa told BBC News Online.

"While economic conditions worldwide remain weak, we continue to strengthen our competitive position and expect to see moderate unit growth in microprocessors and flash memory in the fourth quarter," chief executive Craig Barrett said in a statement.

Cheaper chips

Net income during the July-to-September quarter fell to $655m from $2.89bn a year earlier.

We wanted to be ready for the back-to-school selling season

Maria Marced
Intel

Sales fell by one quarter to $6.5bn, slightly better than analysts had predicted.

"The revenues came very much within the range we had predicted," Ms Marced said.

"Our volumes in the third quarter were up versus the second quarter in all our segments: Processors, chip sets, motherboards, flash memory, communication products, networking products," she said.

But profits were hit by Intel's sharp price reductions in August, when Pentium 4 processors became much cheaper for consumers.

"We wanted to be ready for the back-to-school selling season which typically is quite important in most countries," said Ms Marced.

"On top of that, we wanted to be ready for the [forthcoming] launch of Microsoft's Windows XP."

Shares

Shares in the company rose $0.58 cents to $24.96 ahead of Tuesday's announcement.

The stock rose in early after-hours trade, then fell before rebounding again.

So far this year, Intel shares have lost about a fifth of their value, in line with those of other chip makers.