Intel's first-quarter net income drops

Intel on Tuesday reported that its first-quarter net income fell 12 percent year-over-year, although revenue was in line with analyst expectations.

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Intel on Tuesday reported that its first-quarter net income fell 12 percent year-over-year, although revenue was in line with analyst expectations.

The company's net income was $1.4bn (£709,000) for the first quarter, ending 29 March.

Earnings per share were $0.25, an 11 percent drop compared to last year, but in line with expectations of analysts polled by Thomson Financial.

The company reported revenue of US$9.67 billion (£4.9 billion), a 9 percent increase compared to last year, and just a hair over analyst estimates of $9.63 billion.

Intel in March warned that low prices for NAND flash memory chips would have a greater financial impact during the first quarter than company officials had initially anticipated. Lower prices for NAND flash would bring down Intel's expected first-quarter gross margin from 56 percent, "plus or minus a couple of points," to around 54 percent, the company said. The gross margins for the quarter were in line at 53.8 percent, according to Intel.

The combined revenue of NAND and NOR flash memory was down 15 percent compared to the fourth quarter last year, said Stacy Smith, chief financial officer at Intel, during an earnings conference call.

During the call, Paul Otellini, Intel's CEO, assured shareholders that the company was in the NAND memory business to make profits. When asked about Intel's chances of disposing its NAND assets, he said Intel has a lot of ideas to bring the business back on track, but said it would be inappropriate to discuss them publicly.

Similar questions were raised about the NOR memory business a year-and-a-half ago when the company was negotiating its NOR business options with other companies, Otellini said. Intel is now divesting its NOR assets to Numonyx, a flash-memory joint venture it formed with STMicroelectronics and Francisco Partners this quarter.

NOR and NAND flash are types of memory used as storage for MP3 players and cell phones, as well as in removable memory cards slotted into digital cameras and other devices.

 
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