Intel facing first quarterly loss in 21 years: reduces production

Jan 21, 2009
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Intel could post a quarterly loss for the first time in 21 years, if a leaked internal memo quoting CEO Paul Otellini is to be believed. Otellini tells staff that "we are not going to wake up in six months with everything rosy again", and describes the financial performance this coming quarter as "too close to call". While no job cuts are planned, empty posts will be filled "selectively" and the company has failed to officially estimate future performance, a move which has left analysts jumpy.

Net income dropped to $234 million in Q4 2008, down from $2.27 billion the previous year, and is unofficially estimating revenues of around $7bn for the current quarter, down 28-percent on Q1 2008. However Intel claim they don't have enough insight to make an accurate prediction, something Otellini's memo acknowledges is a first during his 34 years at the company.

Intel factories are already running at scaled-down production rates, in an attempt to save money, and the company plans to cut discretionary spending and further slow down production. This is expected to have a knock-on affect on manufacturing workers, as some sites are forced to close and staff relocate. CPU prices were cut earlier this week, in a move which caused similarly beleaguered AMD to reduce their own processor costs.


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