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There is nothing wrong with the cpu's, as per the warranty its with intel SA if you have any problems.
The reason for the price is because its a urgent sale.
The Dual Core Xeon E5502 processor delivers impressive performance -- up to 2 times the that of earlier generation single-core processors. Each of the cores has L1 and L2 caches, with an additional 4MB of L3 cache available to be shared to bear really heavy loads or large data sets. The 64bit cores are designed to handle all of today’s x86 32bit software with ease and effortlessly migrate to 64bit software.
You also get Intel Virtualization Technology hardware enhancements that support software based virtualization. It works with VMware, Virtual PC and XenSource and products from an increasing number of software vendors. Combine these with the processor’s great power efficiencies and you can run virtual environments on blade systems with fewer cooling challenges which gives you maximum power and services per square foot of server space.
Comes without Stock cooler, this is for CPU only.