![]() ![]() The company cut prices by as much as 48 percent for some 20 older chips in its lineup. "We are not going to wake up in six months with everything rosy again," Otellini wrote in the memo.Īgainst this bleak backdrop, it's understandable that Intel recently pulled out one of the most reliable weapons in its inventory-thinning arsenal - slashing processor prices. Don't think this recession is for real? Just imagine that remarkable streak of profitability ending. Intel has turned a profit for 87 straight quarters, even surviving the dot-com implosion in the early part of this decade without going into the red. How bad will it get? Bloomberg last week cited an internal Intel memo in which Otellini reportedly told employees that the company's prospects for finishing the first quarter in the black were "too close to call." Intel wouldn't provide formal earnings guidance for the current quarter, but Otellini said that "for internal purposes, the company is currently planning for revenue in the vicinity of $7 billion" - which would be a 28 percent decline from the $9.7 billion Intel hauled in for the first quarter of 2008. In fact, it's going to get worse, promised a less-than-jaunty Otellini during Intel's recent fourth-quarter earnings call with analysts. the fourth quarter of 2007.Īnd that's not the end of it. The profits picture was even more frightening: Intel's net income in the last quarter of 2008 declined a whopping 90 percent vs. Intel is no exception - the chip maker saw its fourth-quarter revenues drop 19 percent compared with the previous quarter, the first time in years Intel did worse in Q4 than in Q3. The semiconductor industry has been hit hard and fast by the global economic downturn. But some Intel channel partners, most of whom have considerably less wiggle room, say they're concerned that the company's normative "tear-down, start-from-scratch" product cycle isn't appropriate for current market conditions - or the current needs of the system integrator channel.Īnd is it really in Intel's interests to keep driving in the fast lane when everybody else is pulling off the highway? Can "tick-tock" survive the worst economy since the Great Depression? ![]() The chip giant has deep pockets and could theoretically bull its way to the recovery without changing a thing. ![]() The question is whether Intel has the kind of mutant marketing superpowers that would be required to continue shipping the most expensive new processors and platforms in a climate of severe cost-cutting, project postponements and all-around economic uncertainty. Spearheaded by CEO Paul Otellini, Intel's leadership demanded flawless product road map execution, and the company's engineers delivered.įew would doubt that the Santa Clara, Calif.-based chip maker has the organization and the brainpower to nail whatever road map targets it sets. They call the strategy "tick-tock." And for the past several product cycles, it's worked a treat, delivering dominant market share and attendant profits to Intel even as AMD and other chip makers struggled to keep up. But the current economy calls into question whether the vendor's strategy still makes sense.Īfter falling behind smaller rival Advanced Micro Devices on multicore technology several years ago, Intel unleashed a new plan to set the pace of innovation by tightening product development cycles and hitting yearly road map targets with metronomic precision. Microprocessor giant Intel prides itself on pushing out cutting-edge technology at a lightning-fast pace. ![]()
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