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Intel Appears To Be Winning the War
Intel's Reagan-like strategy of spending its way out of armed nuclear conflict with AMD seems to be working

Intel's Reagan-like strategy of spending its way out of armed nuclear conflict with AMD seems to be working.

The telltale sign is its gross margin.

Intel had predicted a dour 49% for the first quarter but when the results came in on Tuesday it had managed 50.1% and with new if guarded optimism raised its full-year projection from 50% to 51% in the expectation of a stronger second half.

Intel's man of the hour, CFO Andy Bryant, attributed the spike to stronger-than-expected ASPs - despite the brutal price wars that have left AMD in disarray - and lower manufacturing costs complements of its 65nm process technology as well as the restructuring exercise it finished a quarter ahead of schedule, dumping 11,000 jobs, 11% of its people.

Intel, however, forecast seasonally lower revenues this quarter than Wall Street expected. It says it'll do $8.2 billion-$8.8 billion with a gross margin of 48%. The pundits were thinking around $8.86 billion.

Intel earned $1.61 billion in Q1, or 27 cents a share, up 19% year-over-year on revenues down 1% to $8.85 billion. The Street was thinking close to $9 billion but sales were down across-the-board and profits were enhanced by a $300 million tax adjustment that added five cents.

Inventory was up slightly to $52 million. Servers were up 8% quarter-over-quarter to about $1 billion with ASP losses. Desktop revenues came to about $2 billion, down 13% with flat ASPs and mobile revenues were also around $2 billion, down 9% ahead of the Santa Rosa introduction next month, but ASPs held.

Intel CEO Paul Otellini, who suggested Intel regained market share, brushed aside the specter of AMD's fearsome Barcelona quad. "I'm assuming," he said, "we will be able to maintain our competitive lead in all segments." Barcelona will be AMD's first quad, supposedly made to a better design than the dozen quads Intel is already selling. Intel expects very little impact. We'll see.

From Beijing this week Intel announced the coming - imminent and otherwise - of some 20 new products.

About Virtualization News
SYS-CON's Virtualization News Desk trawls the news sources of the world for the latest details of virtualization technologies, products, and market trends, and provides breaking news updates from the Virtualization Conference & Expo.

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Intel's Reagan-like strategy of spending its way out of armed nuclear conflict with AMD seems to be working. The telltale sign is its gross margin. Intel had predicted a dour 49% for the first quarter but when the results came in on Tuesday it had managed 50.1% and with new if guarded optimism raised its full-year projection from 50% to 51% in the expectation of a stronger second half.




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