Directly from Intel:
SANTA CLARA, Calif., July 17, 2007 – Intel Corporation today announced second-quarter revenue of $8.7 billion, operating income of $1.35 billion, net income of $1.3 billion and earnings per share (EPS) of 22 cents.
Among the notables is the net profit increase of 44% from the pre-Core2 year ago results. While demand for the quarter was strong, pricing competition in the AMD segment, also known as "the low end", remains competitive. For this reason, along with the softer demand in the Flash business, Intel's margins were significantly below expectations at 46.9%.
The server business continues to be robust with doubling of unit shipment of Xeons, exceeded the milestone of 1 million Quad Core shipped resulting in double digit percentage increase in revenue for this segment alone. The market continues to shift to DP while Intel takes advantage completely unchallenged.
The channel was unusually healthy during the quarter with significant increase in volume shipments. While this positive news affects both companies, the substantial impact of the lower revenue and ASPs on Intel's margins doesn't bode very well for AMD. I'm beginning to second guess any upside on AMD's results this quarter as Intel painted a bleak picture of the low end segment where AMD currently is allowed to do business.
The outlook for the 2nd half looks even more promising for Intel. With the 45nm Capex hit behind them, margins are expected to go back up to the 50's. Caneland is expected to arrive next quarter which should disrupts AMD's remaining hold on decent margins. Expect Intel to shift all marketing focus in the coming months to its Centrino brand hopefully to limit AMD's assault on the mobile retail segment. As 45nm will start production in Q3 and shipment in Q4, Intel expects its advantage in cost and product performance to increase even further.
It appears as though Intel will launch Penryn with significant volume as it admitted to taking 1-2% margin points for unqualified parts in Q3. This is a large number for a pre-production inventory and only points to the confidence Intel has on its 45nm process. As soon as Intel gets factory certification on the pre-qual build sometime in Q4, we should see good availability on the parts. Intel is so certain about 45nm that it even leaked the prices earlier today.
Directly from Intel: