Intel announced its fourth-quarter financial results yesterday. The company's stock dipped more than 4% as quarterly profit fell 40 percent. The huge drop in profits was caused by the price war with AMD, Intel's reorganization and the switch to the 45nm production process.
Intel made $1.5 billion net profit in the fourth quarter, or 26 cents per share, compared to $2.45 billion, or 40 cents per share, a year earlier. Revenue was 5 percent down from a year ago to $9.7 billion, but better than the forecasted $9.4 billion.
The chip giant also says it expects first quarter revenue between $8.7 billion and $9.3 billion, compared to the average Wall Street forecast of $8.9 billion.
Intel's gross-margin in the fourth quarter was 49.6 percent. This is 0.5 percent more than in the third quarter but a lot less than the 61.8 percent in 2005. For the first quarter of this year Intel expects a gross margin of 49 percent and for the whole year about 50 percent.
Last week AMD's stock dropped 11 percent as the company warned for lower than expected profits.