Fierce competition from AMD causes Intel profit loss of 57%

Intel has had a very bad year. Intel's profit of 33 cents per share dropped to a profit of 15 cents per share this year, a drop of 57%. We, in the Community of Neowin, know that this has to do with the competitive failure of the NetBurst architecture vs AMD's Athlon64. In order to maintain their marketshare, Intel has dropped prices which has had a negative result on profitability.

Intel's long term future is, however, not so gloomy. Realizing that their Pentium 4 Netburst architecture was not their salvation, Intel decided to take a step back and work with a design that had more to do with the Pentium III. The Intel Core (aka Yonah) processor was based on the Pentium M design. While it was a bit of step backwards, as they both lack 64bit support, it was enough to convince Apple to choose Intel over AMD when they made their switch to x86 processors. Intel's future gets rosier when you consider their Intel Core 2 design which will combine the advantages of the Yonah core with EMT64T support. The Intel Core 2 desktop processor (aka Conroe) are scheduled to begin shipping in one week's time.

Intel was the worst performer on the Dow Jones Industrial Average for 2006 having lost 26% of its value. To respond with the loss in performance, Intel has layed off 1000 managers or about 1% of their workforce.

We expect that a more competitive product will change that situation drastically but, as consumers, we worry about paying higher prices to make up last year's lost profits.

News source: The Globe and Mail

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