Price War Pounds Intel

Intel said sales in the three months ended Dec. 30 totaled $9.7 billion, at the top of the company's guided range of $9.1 billion to $9.7 billion in revenue.

Net income was $1.5 billion, or 26 cents a share, compared to the profit of $2.5 billion, or 40 cents a share, that Intel posted a year ago this time.

Analysts polled by Thomson Financial were looking for EPS of 25 cents on sales of $9.45 billion.

Intel said it had a gross margin level of 49.6%, in line with its guidance of 50% gross margin, plus or minus a couple of points.

The company said average selling prices of its microprocessors increased in the fourth quarter, even as total unit shipments increased to record levels.

By contrast, rival AMD warned the Street last week that unit shipments were up in the quarter, but that average selling prices declined significantly -- an indication, according to many analysts, that AMD was being forced to slash prices in order to keep selling its chips.

Intel, which revamped its entire microprocessor product line in the summer of 2006, said the higher selling prices owed to a mix shift to leading-edge processors in all segments, along with growth in laptop chips as a percentage of its PC microprocessor product mix.