Intel profit soars 44% in Q2 despite price war

Low prices for chips offset by high unit shipments

By Ben Ames

July 17, 2007 12:00 PM ET

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Intel Corp. reported second-quarter profit of $1.3 billion, up 44% from the same period last year, as higher-than-expected unit shipments offset low prices for its microprocessors.

The results came despite an ongoing price war that has arisen as Intel and Advanced Micro Devices Inc. compete for larger shares of the processor market. Both companies have been cutting prices on their chips as they upgrade their products from standard chips to dual-core and quad-core processors.

Intel is also in the final stages of a corporate reorganization that resulted in the layoffs of thousands of workers in 2006 and calls for at least 1,800 more layoffs in August. The company said today that it incurred restructuring charges of $82 million during its most recent fiscal quarter as it continued to adjust to the changes.

Despite those challenges, Intel earned 22 cents per share on revenue of $8.7 billion for the quarter that ended June 30, beating Wall Street expectations that the company would earn 19 cents per share on revenue of $8.54 billion, according to analysts polled by Thomson Financial. Intel also beat its own mark from the second quarter of 2006, when it earned 15 cents per share on revenue of $8.01 billion.

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