Tax item boosts Intel's quarterly profit

Amid fierce price war with rival AMD, Intel overhauls chip line and reports strong numbers.

Reuters

May 17, 2007 5:00 a.m. PT

Intel, the No. 1 microchip company, posted a higher quarterly profit on Tuesday, in line with analyst expectations despite a bruising price war with rival Advanced Micro Devices.

Intel said that first-quarter net profit was $1.6 billion, or 27 cents per share, compared to $1.36 billion, or 23 cents per share, a year earlier. It said the profit included a tax item that boosted earnings per share by about 5 cents.

Revenue fell less than 1 percent to $8.85 billion.

Intel was expected to have earned $1.28 billion, or 22 cents per share, on revenue of $8.96 billion, according to the average forecast of Wall Street analysts on Reuters Estimates. That estimate includes $50 million in restructuring costs but not the tax item that boosted earnings.

The chipmaker has been locked in a price war with its smaller rival, AMD, which said last week that quarterly sales would be about 20 percent below expectations due to falling prices and lower unit shipments.

Intel overhauled its entire line of processors last year in an effort to stop or reverse big market-share gains by AMD, whose chips were widely considered to be more powerful and energy efficient. Over the past year, Intel's shares have risen 9 percent while AMD's have fallen 56 percent.

This week, the company is holding its Intel Developer Forum in Beijing.