Intel Hit Hard by Financial Crisis, Q4 Profit Plunges 90 Points

Still meets forecasts

Santa Clara, California-based leading chip maker Intel has just posted its Q4 2008 financial results, with a revenue of $8.2 million and a profit of 4 cents a share, down by 90 percent from the $2.3 billion, or 38 cents a share the company recorded in the fourth quarter of 2007. The chip maker said that its quarter results were affected by a $1 billion reduction in the carrying value of its investments in Clearwire, a wireless broadband service that has partnered with Intel to enable WiMAX services around the U.S.

“The economy and the industry are in the process of resetting to a new baseline from which growth will resume,” said Paul Otellini, Intel president and CEO. “While the environment is uncertain, our fundamental business strategies are more focused than ever. Intel will continue to extend its manufacturing leadership, drive product innovation, develop new markets and implement operating efficiencies that have already taken more than $3 billion out of our ongoing cost structure since 2006. Intel has weathered difficult times in the past, and we know what needs to be done to drive our success moving forward. Our new technologies and new products will help us ignite market growth and thrive when the economy recovers.”

According to the company, the microprocessor and chipset financial results were “significantly lower,” when compared to Q3, but the revenue from the low-end Atom processor was up to $300 million, thus confirming that this was one of the company's most successful products in 2008. Also, Intel noted that, despite the lower revenue, the Q4 results were in line with the lowered analyst forecasts, following a warning issued last week, the company's second for the December quarter.

Intel also said that “due to economic and uncertainty and limited visibility” it would not provide a revenue outlook for the first quarter of 2009. However, it also mentioned that “for internal planning purposes” it was planning a revenue of approximately $7 billion. Analysts believe that the company's Q1 results will suffer for two big reasons. More specifically, Intel is expected to continue spending high on upgrading its factories and also take some heavy costs for its running factories that aren't working at full potential, due to lower demand.

The chip maker's stock rose 21 cents, 1.6 percent, and closed at $13.29, prior to the earnings report. Intel shares were reported to have hit $13.80 in after-hours trading.