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$8 billion in revenue offset by record $1.45 billion fine causes $398 million net loss

Intel Corporation is starting to see a recovery in the CPU market, as it disclosed its second quarter results showing revenue of $8 billion, up 12 percent from the first quarter. However, this is still lower than the $9.4 billion in revenue for the same time last year, before the recession came into force.

A particularly bright spot for the world's largest semiconductor firm was increased sales in the netbook and net-top category. Revenue from Atom CPUs and related chipsets was $362 million, up 65 percent from the last quarter.

Inventories were lower by $240 million, meaning that Intel can introduce new processors without fear of a massive stockpile of trailing edge CPUs.

“Intel’s second-quarter results reflect improving conditions in the PC market segment with our strongest first- to second-quarter growth since 1988 and a clear expectation for a seasonally stronger second half,” said Paul Otellini, Intel's President and CEO.
 
“Intel's strategy of investing in new technologies and innovative products, combined with ongoing focus on operating efficiencies, continues to yield benefits that are evident in our strengthening financial performance.”

The company would've had a net profit of $1 billion for the quarter, but the firm decided to absorb the entire $1.45 billion fine from the European Commission. This resulted in a net loss for the quarter of $398 million.

At the time the fine was levied in May, Intel stated that it would not affect Intel's operations and its planned 32nm transition to the Westmere family of products later this year. "Intel will continue to invest and innovate," stated Intel spokesperson Claudine Mangano.

The third quarter looks more promising, as the lucrative back-to-school season will boost Intel's revenues. Approximately 45 percent of the 800 million computers globally are three years old or older, suggesting a pent up demand to refresh those machines that will also coincide Microsoft's release of Windows 7 on October 22.


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A small price to pay...
By Qi on 7/15/2009 7:42:51 AM , Rating: 5
A small price to pay to do business in the biggest market in the world. And it's their own fault, if they had played by the rules nothing would have happenend.




RE: A small price to pay...
By HostileEffect on 7/15/2009 8:17:57 AM , Rating: 3
People play by the rules every day and still get burned, but that is outside of this article.


RE: A small price to pay...
By Qi on 7/15/2009 8:37:49 AM , Rating: 1
They can always go to court to fight the decision.


RE: A small price to pay...
By weskurtz0081 on 7/15/2009 8:51:09 AM , Rating: 4
Meh, go to court? It would cost less just to pay the crooked European politicians off than to go to court, but if they did that they would be breaking OUR laws.


RE: A small price to pay...
By michael67 on 7/15/2009 11:40:17 AM , Rating: 2
Say's the man that had tricky dick for Vice-President for 8 years. ;-)


RE: A small price to pay...
By cornelius785 on 7/15/2009 9:47:38 AM , Rating: 4
Didn't Microsoft try fighting and was imposed with a fine every day they didn't pay up? Or do I have my facts all mixed up?


RE: A small price to pay...
By Qi on 7/15/2009 10:21:28 AM , Rating: 2
You are right. Microsoft refused to pay the initial €280 million fine and accordingly was fined an extra couple millions for every day they didn't comply. Of course, if they'd won the case in court, they'd got all the money back.


RE: A small price to pay...
By weskurtz0081 on 7/15/2009 10:56:10 AM , Rating: 1
The EU really is like the mob. They just keep chasing down large American corporations to try and extort money from them through the court system.

Apparently, Google, MS, and Intel didn't pay the politicians as much as the competition did.

BTW- I am pro AMD.


RE: A small price to pay...
By michael67 on 7/15/2009 12:35:34 PM , Rating: 5
US companies think they can behave ore do business the same way as in the US, sorry but we have different rules here, and if you don't follow them you get a fine and if you still wont follow them the fine go's up.

If i would do business in the US would you aspect me to follow US the law?

To bad for US companies we got Neelie Kroes as Commissioner for Competition, actual on of the few politicians i have respect for, even do she is defenely not from a party i would vote for.

quote:
Neelie Kroes made the Forbes' The World's 100 Most Powerful Women list multiple times: as number 47 in 2008, 59 in 2007, 38 in 2006 and number 44 in 2005. They call her "Nickel Neelie" and "Steely Neelie." She apparently earned her nickname because she's tough in the same vein as U.K. "Iron Lady" Margaret Thatcher when dealing with competition issues.

http://en.wikipedia.org/wiki/Neelie_Kroes

And you only report the fines here given to US company's

Just a example Heineken got a 219m euro EU fine for price fixing in The Netherlands population 17m
If you would calculate that for the hole of the EU then that would be a 6.5b euro fine
http://www.fastmoving.co.za/news-archive/supplier-...

Not to be rude but US company's must learn that doing business in the EU is not the same as doing business in the US, different market different rules.
And we have a government that actual try's to protect it citizens in stead op protecting company's. (still failing very often do, but that go's for all government ;-)

Its a different filosofi from the US model, and not saying our system is better then the US, but pleas just respect our way of life just as we do yours.

quote:
Apparently, Google, MS, and Intel didn't pay the politicians as much as the competition did.

Do you really wane place a bet on how got the most crocked politicians the EU ore the US? (i wouldn't)


RE: A small price to pay...
By hyvonen on 7/15/2009 12:41:26 PM , Rating: 2
That was a little hard to read with all the grammatical errors/typos, but overall I agree.


RE: A small price to pay...
By Adonlude on 7/15/2009 12:58:31 PM , Rating: 1
Just imagine a really strong French or Italian accent while reading, then it works.


RE: A small price to pay...
By michael67 on 7/15/2009 1:07:32 PM , Rating: 2
Try Dutch, ;-)


RE: A small price to pay...
By weskurtz0081 on 7/15/2009 1:44:22 PM , Rating: 5
There are only two things I can't stand in this world: People who are intolerant of other peoples' cultures, and the dutch.


RE: A small price to pay...
By weskurtz0081 on 7/15/2009 2:47:28 PM , Rating: 4
For you down raters, that is a quote from Austin Power's faja.


RE: A small price to pay...
By weskurtz0081 on 7/15/2009 12:45:54 PM , Rating: 1
Tell me, how has Google or Intel hurt consumers in Europe? Have prices been higher than they other wise would have been? Were choices limited? I don't know. Should Dell try to sell computers from a CPU manufacturer that has a history of not meeting demand? If the EU were REALLY protecting consumers, I wouldn't have a problem with it, but I don't really think that is what has been happening. Sure, in some cases yes, but in many cases no.

I agree that US companies must learn to do business how it is done in the EU, but the way business is done in many places in the EU is not legal in the US. It is very common for bribes to take place between Government and companies in the EU, not saying it doesn't happen hear but it is more likely to be prosecuted here than there. So, doing business there the way others do can be illegal because they still must follow US laws as well.

Also, I do respect your way of life, never said I didn't, I just don't have much respect for your politicians, nor do I have much of any respect left for US politicians either.

As far as corrupt politicians goes, who knows. On a Federal level, I would have to say the EU considering the the US is one country and the EU is a combination of a bunch of countries. If you lump in all the state politicians and locals etc.... then there is really no way of telling. I guess the best way would be, see who have the most politicians, and they are likely the ones with the most corrupt politicians.


RE: A small price to pay...
By michael67 on 7/15/2009 1:53:48 PM , Rating: 3
quote:
Tell me, how has Google or Intel hurt consumers in Europe?

EU got little problems whit Google, other then they have to follow some EU law.
Intel on the other hand, by pushing out AMD of the market they lowered CPU prizes in the short run, but in the long run they are getting higher because there is less competition.
Remember when the first motherboards came out they ware only in white boxes because all company's ware scared of having there chipset supply cut down by Intel.

If AMD had bin able to sell more and for better prizes chips maybe the company would have bin now in better shape.

quote:
It is very common for bribes to take place between Government and companies in the EU

Italy is not the hole of the EU and bribes are just as (un)common as in the US.
http://en.wikipedia.org/wiki/Corruption_Perception...

My country i Nr 7 in the list of least corrupt country's same go's for the rest of Germanic country in the EU.
Yes the EU got a lot more corrupt whit all its new members but those country's also are fighting corruption more now they are part of the EU and even getting less corrupt now because of it.

And except for the barings bank scandal i haven't seen white collar crime as big here as in the US.
I also have worked in Iraq, talk about corrupt company's.


RE: A small price to pay...
By BZDTemp on 7/15/2009 2:05:33 PM , Rating: 2
Where did Google come into this?

Intel and Microsoft has used their market shares to manipulate the markets they deal in. No one can predict the future (or an alternate past) with certainty so this is of course a point of view and not fact. What we have now is already diffrent due to the cases as the companies in question have made chances so it is about much more than the fines.

Had Intel been doing things legal all the time I'd say there is a good chance AMD would have had more power to innovate meaning lower prices and/or better CPU's AND NOT JUST IN THE EU. What has happened now may have played a big part in making sure AMD is still around.

Similar if Microsoft had been allowed to do as they please their software would be a lot more closed for others than it is. Just imagine what chances OpenOffice would have if it could not do Word-files. Again this benefits not only the people in the EU but ALSO THE PEOPLE OF THE US.

Finally as for corruption. The EU is a very mixed bag with us up north being real boy scouts and those in the south and east not so much. It is tough to make a call and it is not easy to compare the US and the EU. Much more is done on local levels in the EU as the federal level is mostly about common standards and trade. There is no EU tax, EU vat, EU military and so on.

Here is an index on corruption in the nations of the world but this covers more than just politicians.

http://www.transparency.org/news_room/in_focus/200...


RE: A small price to pay...
By remo on 7/15/2009 2:18:25 PM , Rating: 2
Transparency International measure corruption globally.

http://www.transparency.org/policy_research/survey...

According to them it would depend on the country, some are better some are worse than the US. For example the Scandinavian countries are considered the least corrupt countries in the world, germany and the UK on the same level as the US.

http://europa.eu/rapid/pressReleasesAction.do?refe...

There is no doubt consumers were disadvantaged...


RE: A small price to pay...
By onelittleindian on 7/15/2009 1:51:37 PM , Rating: 2
"sorry but we have different rules here"

You sure do. If put in writing, those rules would run something like "Arrogant US firms will be penalized sternly for making better products at lower prices!"

You can quote fines against European firms if you want, but the fact remains the fines against US companies have been 10 times or more higher, for "offenses" that were far less blatant, or questionable entirely. Intel didn't conspire to fix prices like Heineken did. Their joint marketing arrangements HELPED European consumers and retailers both.


RE: A small price to pay...
By michael67 on 7/15/2009 2:09:30 PM , Rating: 2
quote:
You sure do. If put in writing, those rules would run something like "Arrogant US firms will be penalized sternly for making better products at lower prices!"

Like is sad below, volume discounts isn't illegal in the EU at all, its even welcomed

What is illegal , is selling $110 CPUs that are $100 whit volume discount for $95 if you don't sell any ore less then 5% AMD systems.

That called pushing out a smaller competitor out of your marked by strong arming, and it's not only illegal in the EU but all over the world, but apparently only not in the US.

And the EU isn't the only one that fined Intel for this, and even in the US there is a investigation running in to Intel's business practices.
quote:
Intel didn't conspire to fix prices like Heineken did

That's why in comparison Heineken's fine was a bout 5 times higher then Intel's, Intel's fine was for the hole EU whit 500m citizens, The Netherlands only 17m, way smaller marked.


RE: A small price to pay...
By remo on 7/15/2009 2:41:02 PM , Rating: 2
The fine represents 4.15 % of Intel's turnover in 2008. This is less than half the allowable maximum, which is 10% of a company's annual turnover.

And No, hindering competition is never a benefit for the consumer.

IIRC it was AMD who filed the complaints, isn't that another American company ?


RE: A small price to pay...
By onelittleindian on 7/15/2009 2:48:51 PM , Rating: 2
"hindering competition is never a benefit for the consumer."

But Intel didn't hinder competition. AMD's market share was rising during the period where Intel signed the lions share of these agreements. So much for that argument.

"it was AMD who filed the complaints, isn't that another American company ? "

A company that produces the bulk of their chips in Europe, using European labor. More importantly, Intel is seen as one of the titans of US industry, and blacking their eye is always popular with European voters...which is the real rationale for this suit in the first place.


RE: A small price to pay...
By remo on 7/15/2009 3:59:21 PM , Rating: 2
The fact that it rose does not in any way make intels practices less illegal or less effective. It could've been higher and they could've kept higher profit margins longer.

Regardless of what your thoughts on the market are, Intel was found guilty in the eu and have been in other countries... which may be why the commission found evidence of that "Intel had sought to conceal the conditions associated with its payments".

I would love to hear your thoughts on how a European politician will use this ruling to his favor. Since i assume you are knowledgeable in European national elections and for the courts and the parliament in the EU.


RE: A small price to pay...
By michael67 on 7/15/2009 4:02:35 PM , Rating: 2
quote:
But Intel didn't hinder competition.

Yes it did, read this i would say http://europa.eu/rapid/pressReleasesAction.do?refe...
If the US cant control there own company's, we do it gladly for you!
quote:
AMD's market share was rising during the period where Intel signed the lions share of these agreements. So much for that argument.

Marked share is not the same as profit margin, by locking out competition AMD could not sell top CPU for high profit
Now AMD got a bigger market share but only a marginal profit share,
So the point is for sure still valid!
quote:
A company that produces the bulk of their chips in Europe, using European labor.

Intel is producing 4 times more CPU's in Ireland then AMD in Germany, ore is Ireland not a member of the EU anymore?
quote:
and blacking their eye is always popular with European voters...which is the real rationale for this suit in the first place.

Ehh, EU commissioners are appointed in very roughly the same way as supremecourt judge's are in the US, there function is of course totally different, but if a seat is opening up a certain country that has his turn has to deliver a person usually a old but can also be a sitting politician that is respect by all sides in his own country.

Basing the EU is apparently easy, getting your facts strait seems mouths harder.


RE: A small price to pay...
By michael67 on 7/15/2009 3:09:59 PM , Rating: 2
Actually MS had to pay more because they diden't comply whit EU law and ruling for opening and documenting there closed standards.

The high amount of the total fine was because of that, not because the diden't pay the initial €280 million fine.

MS gave the EU the finger by not opening documenting there protocols, the EU grabbed then MS by the balls by saying for every day you don't oblige by our ruling we fine you $500.000 ore so, so it was there own fault things got so mouths out of hand.
http://www.youtube.com/watch?v=16u0wwCfoJ4


RE: A small price to pay...
By michael67 on 7/15/2009 3:10:28 PM , Rating: 2
Actually MS had to pay more because they diden't comply whit EU law and ruling for opening and documenting there closed standards.

The high amount of the total fine was because of that, not because the diden't pay the initial €280 million fine.

MS gave the EU the finger by not opening documenting there protocols, the EU grabbed then MS by the balls by saying for every day you don't oblige by our ruling we fine you $500.000 ore so, so it was there own fault things got so mouths out of hand.
http://www.youtube.com/watch?v=16u0wwCfoJ4


RE: A small price to pay...
By phantom505 on 7/16/2009 8:00:40 AM , Rating: 2
Yeah whatever. They got caught. Does it deserve that much of fine? Did every little thing they were accused of pan out? You can argue those, but the bottom line is you can't rebate distributors for not using the competition.

"Free markets" does not mean you get to do whatever you can think of to beat the competition. It's about everyone playing by the same rules and yes, even handicapping those who have power. Sorry if this doesn't fit your world view, but that's how it is.


RE: A small price to pay...
By Regs on 7/15/2009 8:20:03 AM , Rating: 2
Intel and the EU...both large organizations looking to make a quick buck and runned a little crooked. Maybe they're a little too large for their own good.

It's hard to pick a side on this one, all though Intel has been "less than fair" with AMD. I would still like to see what the USA will do.


RE: A small price to pay...
By BZDTemp on 7/15/2009 5:41:56 PM , Rating: 2
quote:
Intel and the EU...both large organizations looking to make a quick buck and runned a little crooked. Maybe they're a little too large for their own good.


LOL - comparing a company with a union of nations. I am sorry but if Intel is large the the EU is mega super gigantic and it also a totally different entity.

The EU is not a company trying to make money. It is an organization making sure it's member states prosper and that includes going after companies abusing their market shares. Besides if the Intel case was about the money the fine is small potatoes in a union with almost 500,000,000 people.


RE: A small price to pay...
By superPC on 7/15/2009 8:23:36 AM , Rating: 1
Europe is not the biggest market in the world, Asia is. with population close to 4 billion and still only a small percentage of that owns a computer, there's plenty of room to grow.


RE: A small price to pay...
By Qi on 7/15/2009 8:28:53 AM , Rating: 2
Asia has a bigger population, but it isn't the biggest single economic market in the world.

https://www.cia.gov/library/publications/the-world...


RE: A small price to pay...
By Sdaas on 7/15/2009 10:12:01 AM , Rating: 1
I don't know, If you add together all of the Major Countries in Asia. China, Japan, South Korea, Thailand you get about 18.6 Trillion. Which is a good 3.2 Trillion more then the EU. So Yes, I would have to Say that Asia does in fact have more buying power. All of those countries are also growing in buying power as a almost larger rate then both the US and EU combined.

That said, EU is a big market to be in so you will have to play politics there.


RE: A small price to pay...
By Qi on 7/15/2009 10:20:03 AM , Rating: 2
China, Japan, South-Korea, etc, are all individual countries with their own economic markets. The European Union is a single economic market, with its own representative at the World Trade Organization. As far as the economy is concerned, the European Union can almost be treated as a single country.


RE: A small price to pay...
By cfaalm on 7/15/2009 9:02:26 AM , Rating: 2
Potentially you might be right, but they're not quite there.


RE: A small price to pay...
By onelittleindian on 7/15/09, Rating: 0
RE: A small price to pay...
By cfaalm on 7/15/2009 9:12:49 AM , Rating: 2
Anti competitive? It was Intel that was found anti competitive, in Japan, South Korea and the EU with a case pending in the USA. Besides, the fire was started by the only serious competitor: AMD.

Perhaps this will increase prices of CPUs.


RE: A small price to pay...
By RjBass on 7/15/2009 9:16:35 AM , Rating: 2
So while it may not be truly fair, from what your saying, maybe now AMD will have a slight advantage in the EU, thus helping them a long a bit.


RE: A small price to pay...
By Qi on 7/15/09, Rating: -1
RE: A small price to pay...
By on 7/15/2009 9:41:48 AM , Rating: 1
Lol what? The EU is the largest market because 20+ countries all combined forces. That says nothing about how competitive (or in this case anticompetitive) those markets are.

The only thing Intel did wrong was be too good at making chips. They didn't force anyone to buy their chips, and they didn't prevent anyone from buying AMD. They just made a better product. That's competition.


RE: A small price to pay...
By Qi on 7/15/2009 10:03:41 AM , Rating: 3
quote:
Lol what? The EU is the largest market because 20+ countries all combined forces.
Much like the original American states combined forces to form the United States.

quote:
That says nothing about how competitive (or in this case anticompetitive) those markets are.
If all African countries combined their economies they'd still be poor. The EU is different in that relatively rich countries combined their economies to form the world's largest single economic market. And it does say something about how competitive a market is. If a market is incredibly anti-competitive companies would leave, and that isn't happening.

quote:
The only thing Intel did wrong was be too good at making chips. They didn't force anyone to buy their chips, and they didn't prevent anyone from buying AMD. They just made a better product. That's competition.
If true, they can go to the European courts to present their case. But considering the fact that Intel was fined in Japan and South-Korea too, I don't give them much of a chance.


RE: A small price to pay...
By on 7/15/2009 12:02:33 PM , Rating: 2
Quote: " If a market is incredibly anti-competitive companies would leave, and that isn't happening"

Umm, yes it is. I've seen several stories just this year about how major corporations are moving outside the EU, into Switzerland (no, its not part of the EU), or other free market havens.

Quote: "Much like the original American states combined forces to form the United States."

Congratulations on the most irrelevant point of the year award. What does this have to do with anything?


RE: A small price to pay...
By Regs on 7/15/2009 9:25:59 AM , Rating: 2
AMD was the one that brought it up with the EU in the first place if I can remember correctly. It's not like the EU is on one of their crusades to "protect" their consumers.


RE: A small price to pay...
By Narcofis on 7/15/2009 9:51:19 AM , Rating: 2
Small question? How much of this will AMD see since they were the most affected by intel's anti-competitive practices.

My guest would be the EU will keep all of it.


RE: A small price to pay...
By Qi on 7/15/2009 10:32:35 AM , Rating: 3
AMD will benefit not in money, but in a more free market. The fee will indirectly go back to the consumer since they are the ones that ultimately were affected by these practices.


RE: A small price to pay...
By kaoken on 7/15/2009 12:25:06 PM , Rating: 2
OK you are all wrong. With the rise in globalization the single largest market is the god damn world.


USA and economics
By filipenko on 7/15/2009 9:28:03 AM , Rating: 2
So, just to clarify, is it OK to break laws in USA if you have much money?

When you catch a thief, are you actualy tramping on his success? And do you let him go if he is an already rich, succesfull thief?

Intel was caught in monopoly abusing, something which is punishable by law in almost any country. Why you choose to allow this in your own territory, I don't know. Perhaps because you have some nationalistic illusions. But don't put regulatory bodies of EU in same plane with some crooked boards of directors that were doing something which is not allowed on any open market. Better ask yourselves why doesn't FCC investigate same thing back home. Oh, I forgot, even if they do abuse in foreign countries, they wouldn't dare do something silimar in good ol' USA.




RE: USA and economics
By on 7/15/2009 9:50:22 AM , Rating: 2
Intel was NOT "caught in monopoly abusing". I seriously doubt you have the slightest idea what Intel was actually doing here, or why its in no way anticompetitive.

All Intel did was sign joint marketing arrangements with some companies. Obviously it makes no sense to market your own competitors products, so Intel offered matching marketing dollars only to those firms which carried Intel products only.

Did that prevent AMD from selling their own products? AMD chips were still available from HUNDREDS of other companies all across Europe. Did anyone who actually wanted an AMD chip in this period ever have any trouble finding one? No.

More importantly, did this hurt the European consumer in any way? (In case you've forgotten, these laws exist to protect consumers, not companies who can't compete). The price of chips from BOTH companies plumetted during this period, and innovation soared.

No wonder the EU wants to shut that down. Smells too much like success.


RE: USA and economics
By wookie1 on 7/15/2009 12:28:55 PM , Rating: 2
I don't think that the EC found that any laws were broken. What they think is anti-competitive is volume discounts. Say a big OEM has a couple of options. They want to build 10 million computers. Option 1 may be to build half Intel and half AMD (5 million of each). Say they pay $110 per CPU from both companies at this volume level for simplicity. Now suppose that they could get CPU's from Intel at $100 each if they bought a quantity of 10M, which would save them $100M total to go with this single-supplier approach with the higher volume. They may consider this to be a better value proposition than producing computers with CPU's from different companies.

Most industries offer volume discounts, but it now appears that those that do risk hefty fines. I wonder if Costco would be fined under this ideology?


RE: USA and economics
By remo on 7/15/2009 12:37:56 PM , Rating: 2
Does the Commission seek to limit companies' ability to provide customers with discounts?

No. This case is about the conditions associated with Intel's rebates and payments, not the rebates and payments themselves. What is at stake here are loyalty or fidelity rebates, granted on condition that a customer buys all or most of its requirements from the dominant undertaking, thereby preventing that customer from purchasing from competitors. Intel also paid clients to delay or not launch computers incorporating a competitor's CPUs, a conduct which is not linked at all to a company's ability to provide customers with discounts.

http://europa.eu/rapid/pressReleasesAction.do?refe...


RE: USA and economics
By oserus99 on 7/15/2009 12:54:57 PM , Rating: 2
So let me see if I have this straight... Intel offered a discount to the companies in order to have them buy a specified amount. These companies agreed to this contract with Intel for primarily greed factors and probably passed on some of those savings to their customers (to stay competitive, not for any moral high ground.) So the EU steps in and slaps Intel with a fine for not charging their customers more, not the companies that actually agreed to the contracts,then they keep the fine collected where it gets lost in a bureaucratic wasteland, and they call this good for their people? "Hey, sorry folks, you're going to have to pay more for your computers now, but hey, look at the nice limos were got for the government's use." (Yes, I know the same thing happens in every other company, but doesn't make it right.)


RE: USA and economics
By remo on 7/15/2009 1:38:41 PM , Rating: 2
It was not rebates based on how many chips the OEMs bought but on a % of their sales.

"Hey, sorry folks, you're going to have to pay more for your computers now"

A healthy competition wouldve lowered prices as well, remember this was during the willamette -> prescott era.

#

Intel gave rebates to computer manufacturer A from December 2002 to December 2005 conditional on this manufacturer purchasing exclusively Intel CPUs
#

Intel gave rebates to computer manufacturer B from November 2002 to May 2005 conditional on this manufacturer purchasing no less than 95% of its CPU needs for its business desktop computers from Intel (the remaining 5% that computer manufacturer B could purchase from rival chip maker AMD was then subject to further restrictive conditions set out below)
#

Intel gave rebates to computer manufacturer C from October 2002 to November 2005 conditional on this manufacturer purchasing no less than 80% of its CPU needs for its desktop and notebook computers from Intel
------------------------------------------------< br />
Where does the money go?

Once final judgment has been delivered in any appeals before the Court of First Instance (CFI) and the Court of Justice, the money goes into the EU’s central budget, thus reducing the contributions that Member States pay to the EU.


RE: USA and economics
By oserus99 on 7/15/2009 2:27:30 PM , Rating: 2
I understand the charges, but it still doesn't dismiss the fact that Intel was fined but not the other half of the willing participants.

Also you say the fine reduces what countries will have to pay into the EU's coffers. Have you ever seen any reduction on the books? Do you honestly believe this will be the first time?


RE: USA and economics
By remo on 7/15/2009 3:17:08 PM , Rating: 2
I would assume it is because there weren't any complaints filed against the OEM´s.

The membership fee to the EU varies alot depending on the size of the EU budget and currency exchange for those countries that arent part of the euro.

New rules on how much each country shall contribute was made this year and should result in lower fees for some. For example sweden will pay 3-4billion SEK (500 000 000~USD) less in 2010 than they did in 2008.

The budget is official, should be available for download... but i doubt this fine is specified on its own.


RE: USA and economics
By michael67 on 7/15/2009 1:04:49 PM , Rating: 2
Volume discounts isn't illegal in the EU at all its even welcomed

What is illegal , is selling $110 CPUs that are $100 whit volume discount for $95 if you don't sell any ore less then 5% AMD systems.

That called pushing out a smaller competitor out of your marked by strong arming, and it's not only illegal in the EU but all over the world, but apparently only not in the US.


RE: USA and economics
By onelittleindian on 7/15/2009 1:54:52 PM , Rating: 2
"That called pushing out a smaller competitor out of your marked by strong arming"

Funny how AMDs share of the market actually GREW during the 2002 period when Intel began these arrangements. AMD didn't start to lose share until Intel's much better chips appeared, during a period in which Intel had pretty much abandoned these volume arrangements.

Funnier still how AMD was getting "strongarmed out", yet their chips were still available from hundreds of different European retaliers. Not like anyone who wanted an AMD computer couldn't get one.


RE: USA and economics
By michael67 on 7/15/2009 2:31:01 PM , Rating: 2
Marked share is not that important compared to profit margin.
Yeah AMD got a bigger share but way lower profit margin on there CPUs

When Athlon64 and X2s ware king of the hill AMD could have made mouths more profit on high end parts as they do now on low end parts.

And thus not being in the mess they are now in.


RE: USA and economics
By remo on 7/15/2009 2:34:02 PM , Rating: 2
It would've been surprising if their marketshare didn't rise since they had a _far_ superior product(for the most part of this timeperiod). And the fact that it rose does not in any way make intels practices less illegal or less effective.

Its of course of no interest that AMD´s marketshare might have been even higher if intel weren't conducting illegal practices.

AMD processors were available at "over the counter" boxed, just like Intels. But not from OEM´s to regular costumers and not to larger companies, at least not from those that had an agreement with intel.


RE: USA and economics
By oserus99 on 7/15/2009 7:08:13 PM , Rating: 2
"AMD processors were available at "over the counter" boxed, just like Intels. But not from OEM´s to regular costumers and not to larger companies, at least not from those that had an agreement with intel. "

The problem I have with this is that the end result was the CHOICE of the OEMS's not Intel or AMD. The OEM's chose what they could sell to the most people for the greatest profit. If they had felt that they could sell the AMD systems in volume over the Intel systems they would have. Instead they chose to go with the Intel systems, even in cases where the AMD chips would have been cheaper even after discounts.

From my point of view it appears that the EU commission is trying to artificially create equal competition between non-equal competitors. However, this is not a battle between Honda and Ford, this is more a battle between Coca-cola and a independent bottler. Yes, they both make the same products, but they are in entirely different leagues when it comes to looking at the whole companies.


RE: USA and economics
By oserus99 on 7/15/2009 7:20:27 PM , Rating: 2
"AMD processors were available at "over the counter" boxed, just like Intels. But not from OEM´s to regular costumers and not to larger companies, at least not from those that had an agreement with intel. "

The problem I have with this is that the end result was the CHOICE of the OEMS's not Intel or AMD. The OEM's chose what they could sell to the most people for the greatest profit. If they had felt that they could sell the AMD systems in volume over the Intel systems they would have. Instead they chose to go with the Intel systems, even in cases where the AMD chips would have been cheaper even after discounts.

From my point of view it appears that the EU commission is trying to artificially create equal competition between non-equal competitors. However, this is not a battle between Honda and Ford, this is more a battle between Coca-cola and a independent bottler. Yes, they both make the same products, but they are in entirely different leagues when it comes to looking at the whole companies.


RE: USA and economics
By wookie1 on 7/15/2009 4:50:41 PM , Rating: 2
I'm not so sure that's what happened. Reading carefully what the EU said and what Intel said, it seems very possible that this issue was spun by the EC. Looking back at my example, the major OEM planned to make 10M computers. To get the lowest price for CPU's, the OEM chooses to use Intel CPU's exclusively so that the order is as large as possible. Now the OEM has decided to go 100% Intel, as it saves them $100M in this hypothetical example. Is it possibly that this is what happened and the EC has twisted it to sound like Intel told OEM's that the only way they can get a discount is to not use a competitor's product? Before you answer, consider that the fines go directly to the EC's budget.


RE: USA and economics
By phantom505 on 7/16/2009 8:11:27 AM , Rating: 2
It's pretty simple. You can't give a discount for not using the competition at the level of a whole sale market. That's an effective kickback, you can't do that anywhere as far as I know. Keep in mind the EU uses value added tax and therefore knows when a product is "complete".


By jimbojimbo on 7/15/2009 3:09:54 PM , Rating: 2
That sure is easy money for them. How come the US Union doesn't fine BMW or hell any Chinese corporation?




By ghost101 on 7/15/2009 5:17:13 PM , Rating: 2
All the time,

http://europa.eu/rapid/pressReleasesAction.do?refe...

This month two major european energy companies were find 558m EUR ($790m).

Earlier

http://europa.eu/rapid/pressReleasesAction.do?refe...

Some marine hose producers 131m EUR ($185m).

http://europa.eu/rapid/pressReleasesAction.do?refe...

Car glass producers 1380m EUR ($1950m).

And so on


By ghost101 on 7/15/2009 5:18:51 PM , Rating: 2
http://ec.europa.eu/competition/news_archive.html

Thats the news archive with many more examples.


"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997














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