Intel Corp. Reveals Loss

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Intel, the world's largest manufacturer of computer chips, reported its first loss in more than two decades on Tuesday. The slight downturn came not from sales, but a huge fine levied on the corporation by the European Union.

STEVE INSKEEP, host:

Another American corporate icon, Intel, yesterday reported its first loss in more than two decades. The slight downturn at the world's largest maker of computer chips came not from sales, but from a huge fine by the European Union.

NPR's Karen Grigsby Bates reports.

KAREN GRIGSBY BATES: Commissioners for the EU say Intel has unfairly prevented its competitors from increasing their share of the market. So they fined the microprocessor chipmaker $1.45 billion, the largest fine ever assessed for a single monopoly abuse case. Intel plans to appeal. The majority of the world's personal computers, perhaps as much as 80 percent, are run by Intel microprocessing chips. But while commissioners at the European Union claim they have no problem with any one company enjoying a dominant market share, they object to how Intel has achieved its position.

They believe the corporation has used rebates for years to keep computers with competitors' chips - especially rival AMD - off the shelf. Intel executives say the rebates are a legitimate way to offer discounts to stores and manufacturers. Intel isn't the first U.S. company to be taken to task by European regulators. Microsoft spent years in court fighting antitrust charges and ended up paying fines more than once for a total of more than $2 billion. Microsoft's antitrust troubles tarnished its public image.

Until the fine was announced, Intel had not had the same problem. Speaking to investors on Tuesday, Intel CEO Paul Otellini admitted the planned appeal, quote, "is as much about the reputation as it is about the money."

Karen Grigsby Bates, NPR News.

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