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Intel reports record chip sales but profits tumble 39 percent

Intel Corp. saw its fourth quarter profits plunge 39 percent amid ongoing restructuring charges and a heated price war with undersized rival AMD.

Still, the world's largest chipmaker managed to beat consensus estimates by a penny and set all-time sales records for both microprocessors and flash memory chips in the process.

The Santa Clara, Calif.-based company said it earned $1.5 billion and 26 cents per share on revenue of $9.7 billion, down from $2.45 billion and 40 cents per share on revenues of $10.2 billion in the same quarter last year.

Gross margin for the quarter came in at 49.6 percent, also down sharply from the 61.8 percent reported in the year-ago quarter.

"Intel’s product and technology leadership yielded a strong fourth quarter with higher selling prices and record unit shipments in the fastest growing segments of the market," said Intel President and chief executive Paul Otellini.

Excluding the effects of share-based compensation, the company said it earned $1.7 billion and per-share earnings of 30 cents.

Intel said its fourth-quarter results reflected a gain from the sale of certain communications and application processor assets to Marvell Technology Group, which was partially offset a related decision to place its Fab 23 facility in Colorado Springs, Colo., up for sale.

Meanwhile, fourth-quarter restructuring charges related to the company's structure and efficiency program were said in line with expectations, decreasing earnings-per-share by approximately 1.5 cents.

For its first fiscal quarter of 2007, Intel said it expects revenue to be between $8.7 billion and $9.3 billion with gross margin 49 percent, "plus or minus a couple of points."

Shares of the company were trading down nearly 4 percent to $21.42 in after hours trading on the Nasdaq stock market.