Worsening economy deals a blow to Intel’s profits

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Intel’s fourth-quarter profit plunged 90 percent, as the chip maker battled a worsening economy and recorded a steep loss from investments.

The company made a net profit of $234 million dollars for the quarter ended December 27, compared to 2.27 billion dollars a year earlier. The results included a loss of 1.1 billion dollars from equity investments and interest, primarily due to a billion-dollar reduction in the value of Intel’s investments in Clearwire, the company said. The bright spot for Intel this quarter was the sales of Atom chips that go into netbooks, the small laptops designed for Web surfing and productivity applications.

The U.K. Ministry of Defence is in the midst of an electronic fight with a computer virus that rapidly spread through its computer networks starting Jan. 6. The virus infected computers throughout the military, including those used by the Royal Air Force and Royal Navy, and is one of the most severe attacks the organization has ever faced. It has affected e-mail systems and Internet access but has not jeopardized war-fighting systems. Many staff are without their computers because they’ve been turned off to stop the virus spreading, rather than because they’ve been wiped or destroyed by this virus. Although the Ministry is not naming the cause of the outbreak for security reasons, a likely candidate is the Conficker worm, which targets a flaw in a component in Microsoft Windows.

Losses at Sony Ericsson Mobile Communications widened in the fourth quarter, as the company sold 6.6 million fewer phones than during the fourth quarter of 2007. Sony Ericsson blames the global economic slowdown for its problems, and expects the difficulties to continue this year, especially during the first six months. To turn things around it will look for ways to cut costs by a further €180 million each year, in addition to the €300 million it already expects to save through, for example, the elimination of 2,000 jobs it announced in July. Sony Ericsson also plans to develop more high-end phones, combining music, imaging and Internet services, including one running Android, the operating system backed by Google.

Microsoft has released the first public beta of a tool that solves one of the chief complaints businesses have with Windows Vista: that older Windows applications aren’t compatible with the new OS. Microsoft Enterprise Desktop Virtualization (MED-V) lets people run legacy Windows applications, including those built for Windows 2000 and Windows XP, on Vista by using virtualization technology. The company expects to release the final version later this year.

And those are the top stories from the IDG Global IT News Update, brought to you by the IDG News Service. I’m Peter Sayer in Paris. Join us again later for more news from the world of technology.

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