Intel reports 42% slump in profits last year

Profits at multinational Intel, parent of Republic's biggest employer, slumped by 42 per cent last year, figures released yesterday show.

The company, which employs 5,500 people in Ireland, said profit for the year was $5 billion (€3.9 billion), 42 per cent down on 2005. Earnings per share dropped 39 per cent to 86 cent. Revenue was $35.4 billion.

While these figures were slightly ahead of expectations, investors deserted the stock in their droves. The shares shed 5.2 per cent to $12.31 in late morning trading in New York.

The company blamed last year's restructuring, but analysts say it is feeling the pinch as rival Advanced Micro Devices (AMD) eats into its margins. The news sparked speculation that Intel could sell its flash memory business, part of which is located at its site in Leixlip, Co Kildare.

A spokeswoman said the company does not comment on speculation. But she pointed out that, in its Irish facility, the same equipment is used to process flash memory units and microchips.

Meanwhile, the European Commission has moved towards issuing formal charges against Intel as a result of a six-year investigation into anti-competitive practices at the multinational.

A panel of EU experts set up last year to explore the possibility of success for an antitrust case against Intel has advised competition commissioner Neelie Kroes to launch a legal suit.

The commission's investigation is focusing on whether Intel has abused its dominant position in the market for microprocessors, the chips that act as the brains of computers.

AMD alleges that Intel used threats and kickbacks to computer manufacturers to help it build market share illegally in the EU.

In July 2005 the commission raided Intel facilities in Britain and Germany to search for evidence. However, the commission is proceeding cautiously, given that a case against Intel is likely to prove as complex and controversial as its ongoing legal battle with US software firm Microsoft.

A source said yesterday that Ms Kroes must decide whether to submit an official statement of objections to Intel. A previous attempt to do this failed because a panel of experts found too many weaknesses in the case, sources say.

An Intel spokeswoman said yesterday the company had not been told of any new development in the case. She added that Intel believed its business practices over the past five years had been legal and fair.