Intel's earnings soar high but sales plunge in 1Q

Intel Corporation’s first-quarter earnings announced on Tuesday seem to encourage investors that the company’s profit margins are finally starting to perk up after a worrisome phase of price cutting and serious spending.

Due to Intel’s quick and in time move to a new production process and a huge tax advantage, Intel Corp.'s first-quarter profit margins rose 19 percent, as lesser production costs helped the company survive another phase in a severe price battle with rival Advanced Micro Devices Inc.

According to an Intel’s correspondent, the company reported that it had earned revenues of $8.85 billion, which were slightly lesser than that of the same time last year. The earnings per share had increased to almost 29 cents per share while closing on Tuesday.

Intel, being the largest chip making company, said that the profits for the first quarter of 2007 had climbed up to 19 percent; this was partially due to the one time tax benefit and also because of the company’s step towards a more proficient chip making process.

Although the company enjoyed a good profit, on the other hand, sales went down slightly in the same quarter.

The company’s profits were a surprise to the Wall Street, as it had gone beyond its own projections for the first quarter which was given in January.

This rise in profits is credited to lower production costs and also to selling off of the reserved inventory.

Intel’s’ chief executive officer, while commenting on the success of the company said “The Company had strong momentum and relatively stable pricing during the first quarter”. Intel gained a profit of $1.61 billion, or 27 cents per share, as compared to the profit of $1.36 billion, during the same period last year.

Intel has been surviving a price war with its competitor and arch rival, Advanced Micro devices, for the last several years, which had badly affected the profits of the company. Finally, Intel seems to be reviving its previous status.

The company expects much better profit in the next quarter as well, as the projections for the second quarter show a profit margin of $8.8 billion.