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Intel profits slide, company uncertain about outlook
by Mike Rogoway, The Oregonian
Thursday January 15, 2009, 1:33 PM
Intel was narrowly profitable in the fourth quarter of last year, according to financial results issued this afternoon, and the company said all it knows about the immediate future is that profits will continue to shrink.
"The economy and the industry are in the process of resetting to a new baseline from which growth will resume," Paul Otellini, Intel's chief executive, said in a written statement. "While the environment is uncertain, our fundamental business strategies are more focused than ever."
Intel's fourth-quarter sales totaled $8.2 billion, in line with the dramatically downsized results the company told investors to expect last week. Fourth-quarter sales were 23 percent below the same three months last year.
Fourth-quarter profits totaled $234 million, or 4 cents a share. That's down from $2.3 billion, 38 cents a share, in the last three months of 2007.
Intel wrote down the value of its $1.6 billion investment in wireless Internet carrier Clearwire by $950 million in the fourth quarter, reflecting the sinking value of the Seattle-area company's stock. Clearwire began offering Internet service in Portland recently, using a new technology called WiMAX.
Intel is Oregon's largest for-profit employer, with about 15,000 people working at chip factories, research labs and administrative offices around Washington County. Intel is also the world's largest chipmaker, and its results are closely watched for indications of global economic trends.
The company took the unusual step this afternoon of not issuing a revenue forecast for the current quarter, which ends in March. But Intel said it expects its gross profit margin in the first quarter will be a little above 40 percent, down from 53.1 percent in the fourth quarter.
Intel blamed underutilization of its factories and startup costs for its next generation of chips for the shrinking profits.
Analysts have speculated that falling sales and profits will prompt Intel to cut jobs. The company has said no wholesale layoffs are planned, and did not address the issue in its earnings announcement this afternoon.
Intel's share price rose 21 cents today to close at $13.29, before the company issued financial results. In after-hours trading early this afternoon, Intel's stock was up 30 cents.
-- Mike Rogoway; mikerogoway@news.oregonian.com
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