BBC Tuesday, 17 July, 2001, 21:16 GMT 22:16 UK Intel profits slump 76%

Intel surprised investors with better-than-expected profits Profits at the world's largest chipmaker Intel have plunged 76% during the second quarter of the year.

The semiconductor firm was hit by the slowing economy, slack PC sales and fierce price competition from its rivals.

But despite the heavy falls, Intel has surprised analysts by profits of $854m - that is 12 cents a share - beating expectations by two cents a share.

While Intel's earnings beat expectations, it pales in comparison to the profits seen last year when the world's largest chip maker earned 50 cents a share.

Intel and the semiconductor industry as a whole has been beset by a host of woes that include soft demand for computers and memory products as well as over-capacity for producing such goods.

Rising shares

Intel said it expects in the third quarter to earn three cents a share on revenues between $6.2bn to $6.8bn.

For the three months ending 30 June, Intel said it saw its revenues fall 24% to $6.3bn.

The company announced its results after New York markets had shut, but the stock was up in after hours trading.

Intel's share price has endured a volatile year and ended Tuesday's trading nearly where they began the year - just below $30.

Stiff competition

The leading computer chipmaker has suffered from inroads made by its competitor Advanced Micro Devices (AMD).

AMD's microprocessors have received critical acclaim in recent months, topping the performance of comparable Intel chips in some tests.

A price war between the two chip makers is in full bloom, eroding profits for both companies amid soft demand for personal computers (PCs).

However, despite its advances on Intel's turf, AMD said last week income from the sale of its products fell 92% compared to the same three-month period a year ago.

AMD also warned that it expects further weakening in profits for the current, third quarter and cautioned it may fall into the red.

-- Anonymous, July 17, 2001