Intel explains disappointing Q2 results

As well as facing accusations from the US Federal Trade Commission (FTC) over anti-competitive behaviour, Intel is today explaining why its second quarter profits have fallen 29 per cent.

The chips titan posted Q2 revenues of just under $6.0bn (£3.7bn) - virtually unchanged compared with the corresponding period a year ago and the previous quarter - and profits of $1.2bn (£0.7bn), or 66 cents per share. Although profits were in line with modest estimates from analysts, Intel stock closed down 2 per cent at $80.68 ¾.

Commenting on the results, Intel chief executive Craig Barrett said the company was working to renew growth in spite of a "difficult environment for the computing industry". He said: "We have cut costs, extended our product line, and are ahead of schedule in using new manufacturing processes. As a result, we have increased Intel's competitiveness substantially."

During the most recent quarter, Intel introduced the Pentium II-based Celeron processor for budget PCs. Although it is proving popular after initial market coolness, it carries tiny margins for Intel. Meanwhile, high-margin Xeon processors for powerful workstations and servers were only made available to original equipment manufacturers after the quarter ended.

Intel this week defended its business practices, firing back at FTC claims that the company has abused its market position. A trial starting in January will decide if Intel has the right to withhold its intellectual property from competitors.