Following a number of reorganizational moves and company layoffs in 2006, Intel Corp. (NASDAQ: INTC) rebounded in its most recent quarter as profit jumped from the previous year but shares fell on lower margins.

The chipmaker posted a 47 percent increase in net income during its second quarter on Tuesday, up to $1.3 billion or 22 cents per share. Revenue rose to $8.7 billion, up 8 percent, on an increase in the sales of microprocessors for computers. Wall Street had anticipated earnings of 19 cents per share.

Intel's operational execution continued to strengthen, resulting in an outstanding product roadmap and solid year-over-year revenue growth, said Intel President and CEO Paul Otellini. We're pleased that our efforts to streamline the company are delivering profit growth in excess of revenue growth.

The upbeat report was marred by soft sales of flash memory chips, which pushed the company's gross margin below its internal expectation. The company’s gross margin for the quarter was 46.9 percent, short of the company’s forecast of 48 percent .

The stronger revenue growth came despite the continuing decline of Intel's average selling prices as it battled with rival Advanced Micro Devices during the quarter.

Intel remains firmly in control of servers with strong products. However, Advanced Micro Devices is gaining share in the desktop and laptop segments, forcing Intel to fight with lower pricing, analyst Eric Ross of Think Equity said.

According to CurrentAnalysisWest, Intel's overall share of the U.S. retail PC market was 64.7 percent during the second quarter, compared with 45.2 percent in last year's second quarter. In notebooks, the growth segment of the PC market, Intel's advantage is more like 70 percent compared with AMD's 30 percent.

Investors reacted by sending Intel stock down 5 percent, or $1.28 cents, to $25.05 in after hours-trading on Tuesday on the Nasdaq market.. Shares went up/down in early in Wednesday trading .