Intel boss Otellini warns of first loss in 21 years
INTEL'S CEO, Paul Otellini, has fessed up to the possibility the firm may report its first loss this quarter after 21 years of profitability.
An internal memo from Otellini to employees purportedly notes that after 87 quarters of profit, 2009's first quarter is "too close to call".
The financial crisis and ensuing slowdown in the global PC market means Intel factories have had to run below capacity, eating away at company profits. Coupled with Chipzilla's admission last week that the firm's fourth-quarter net income saw a 90 per cent slump, it is not inconceivable the chip behemoth may have taken a serious hit from the crunch monster.
Though analysts have estimated a first-quarter profit of $228.9 million for the company, Intel noted last week its fourth-quarter net income had dropped to just $234 million, or four cents a share, way down from $2.27 billion, or 38 cents in Q4 2007.
Admittedly, the dire results did include the $1 billion Clearwire writedown, although the firm which is to work with Intel on WiMax also lost 64 per cent of its value last year.
The Chip giant failed to offer an official forecast, which, in his memo, Otellini said was a first in his 34 years at the firm. Instead, Intel said it would assume a revenue of about $7 billion this quarter, down 28 per cent from last year.
Intel, based in Santa Clara, California, fell 88 cents to $12.86 today in Nasdaq Stock Market trading. The shares declined 45 per cent last year.
Otellini noted he had received touching emails from employees who said they would rather endure paycuts than lose their jobs or see colleagues laid off. The memo added there would be no budget for merit pay or promotions any time soon and that the company would only refill vacant jobs on a selective basis.
"We will be focusing on every nickel," Otellini purportedly wrote, adding, "every dollar counts."
Chipzilla will also apparently be forced to cut discretionary spending and slow down factory production, causing certain sites to close and necessitating the relocation of manufacturing workers. µ
L'Inq
Bloomberg
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you'd think they'd have stashed something away for a rainy quarter or two, and Otellini would be wittering on about his huge wad of cash, to calm the nerves. If they've "invested" it all, then he deserves everything he gets - i.e., the boot.
I think they deserve it for chopping the bottom out of the PC industry. They should have known to release the E6300 at $283.
I mean it was faster than everything up to around $700.
Go ATOM!!!
Intel just did a big price cut and I am going to update my rig with this bad boy for $334 at newegg.com.
Core 2 Quad Q9650 3.0GHz 12MB L2 Cache
Put this with a GTX 260 (at least one is below $200 at newegg) on my X38 Motherboard and I will be rocking FPS games.
Using my old CPU and VCard to put in new rig for sale, already have a buyer.
Thank God for free markets and AMD for driving competition.
It is rather short sighted to say that he deserves the boot. Reality is, financial loss in a quarter is something totally different than no financial capital. It would have been surprising if Intel would have made a large profit considering the financial crisis. And besides, talking about wasting money, what the .... did AMD do in the last 5 years...
@Michel
What did AMD do? Hmmm... lets see, beat Intel to 64bit processors on the desktop, crush P4 and P4 Dual, become more competitive in their key sectors, and let's not forget about the acquisition of, arguably, the current best graphics card company on the planet. AMD over the past 5 years IMO has made really only two mistakes, and purchasing ATI was not one of them.
They ignored Intel when they had the lead in the P4/Athlon 64 days and allowed Intel to re-engineer the P3 to the architecture we know today as Core, and Phenom. Trying to engineer a single dual-core chip instead of gluing 2 together like Intel set every other successive chip back to this day, and we all know how hard delays are hard to make up for, no to mention the money wasted.
AMD is still very close to Intel technologically even if they are getting their arses handed to them right now by Core 2 and i7. Intel will have a performance lead for some time into the future, but they better get ready for the time when AMD can start using some more of that graphics card money and stick it back into R&D for processor node technology.
@StillPimpin. I've neither stated that AMD was wrong in principle in buying ATI, neither that it showed the way on the technical front. My comment was on the financial side, and there AMD didn't do to brilliantly. Although they had some brilliant products and had Intel beat, they weren't able to capitalize on that. And that is a mistake by AMD's management graver than that of Otellini.
Their decision to spin of the foundries must still prove itself. It means less financial risk for due the foundries, but also means less control over the production process, and the ability to adapt (to) it.
The financial situation of AMD even proves the point I was trying to make; a loss in a or several quarters doesn't suddenly spell doom. Although I prefer intel for my hardware, I more than like the competition AMD is giving them, the higher AMD can turn up the heat the better the products from the both of them.
My coment on this is pretty simple: if you have some impaired assets and want to stock up for future times, now is the perfect time to report losses.
So, it may be a good idea to report losses - crisis times are idela to clean up balance sheets.
intel doesnt know how to survive when people wont buy 1000 dollar processors, oxymoron of the day
'affordable intel processor'
Rui & Michel have it dead right, this is a financial play and bears all the hallmarks of Otellini's 'financial' background. The real test for the shareholders and board of directors is whether they are truly ready for the 'rebound'. Intel has always said it's building and investing in capacity for the future, but this (PC) market is changing and Intel isn't calling the shots anymore. That, by the way, doesn't have anything to do with AMD, I think the (broad) market just doesn't care any more. Here's any example, anyone know whether the iPhone has a better processor than an HTC phone? it just doesn't matter ...