Intel suffered a 29 per cent profits slide in its second quarter.
Profits were $1.17 billion on turnover of $5.92 billion, compared to $1.65 billion worth of profits last year. Turnover for the second quarter of 1997 was $5.96 billion.
The company expects its third quarter turnover to be flat, but claimed the PC market is recovering.
Gross profit margin during Q2 fell to 49 per cent, down from 54 per cent in the previous quarter.
Intel claimed it had been able to cut costs faster than it had expected, as it fights to stave off competition from AMD, Cyrix and IDT/Centaur, and as the market for cheap PCs continues to grow.
According to Intel officials, stock corrections at large PC vendors are now at an end, and the market will show signs of stimulation from both Windows 98 and the usual September selling period.
The company claimed its cut down Celeron processor accounted for five per cent of units shipped in the second quarter.
While sales in Japan and its Asia Pacific region were not particularly good during the period, this has not harmed Intel severely. Its main markets continue to be north America, Europe and Latin America. Sales in China also rose.
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