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Intel still king of x86 jungle despite Q3 slip

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Chipzilla staggered to its full height yesterday and bellowed aw-wooh-aw-wooh-aw as it released Q3 financial earnings that only marginally disappointed Wall Street. (Yeah, we know that it was Tarzan that made that noise, but you get the picture.) And Craig Barrett, the rough and tough CEO of Intel, said that it expected its fourth quarter results, always its best selling period, would show considerable and good growth. For Q3, Intel turned in turnover of $7.3 billion, a nine per cent increase over the equivalent period in 1998. Its net profit rose by $1.9 billion, a rise of 21 per cent from the same period last year. If the acquisitions Intel made in the period are taken into account, its net profit amounted to $1.5 billion. In the period, it bought or completed the acquisition of Softcom Dialogic, Level One and NetBoost. The results demonstrate that Intel has only been marginally affected by competition from its closest x86 rival, AMD, which introduced its Athlon K7 during the period. That is discouraging news for AMD, which has always maintained that Intel's revenue and R&D model does not support smaller margins when faced with tough competition. In its Q3 results, Intel said its margins were only "slightly" reduced. Intel has slashed and burnt prices on its CPUs during 1999 and ramped its Pentium III faster than any previous chip family. However, what is slightly more worrying for the giant is that Intel admitted sales of its high-end Xeons were not as good as it wanted them to be. Yesterday, we reported that Intel is in the midst of repositioning this range. As we reported at the weekend, it will introduce its Coppermine family later on this month, and will both adjust its prices on its 90-strong chip family. (Coppermine we got the prices). Later today, we will reveal the prices for the two Coppermine parts Intel will introduce later this month. Barrett forecast that Intel will do "seasonally strong" business during the fourth quarter and said that its networking business was also performing solidly. However, Intel did introduce some cautionary notes for Q4. It mentioned the effect of the Taiwanese earthquake, and changes in the mix of processor types and speeds, as well as stock issues, as factors that might effect its earnings. When its different business units are taken into account, Intel claimed that both chip and chipset shipments, as well as motherboards, rose sequentially in Q3. Its flash memory business performed well, and set a new record, according to the company, but its embedded processor and microcontroller unit shipments (the Gulag), fell. Intel also reported that its Fast Ethernet connections showed flat growth in Q3, while its switch business rose. It did not give an explanation for why this was. As far as we are aware, Intel has not yet made any statement on whether it has fixed the technical problems it has with Rambus. (See Rambus fixed? We'll wait and see). However, Paul Otellini, a senior VP at Intel, is now on record as saying that it will ship Camino i820 in Q4, and does not believe that requires a further stepping of silicon. ®

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