Intel 4Q profit climbs as PC market turns around
San Francisco: Intel Corp has said its fourth-quarter profit blew past expectations, confirming a rebound in the recession-battered personal computer market is under way.
Intel`s bright profit outlook for 2010 means the No. 1 maker of computer microprocessors sees a lasting recovery past the stellar fourth quarter — not an isolated holiday shopping blip.
PC shipments grew more sharply than expected in the fourth quarter, a promising sign after a brutal year for the industry during the recession. Intel, which supplies the vast majority of the "brains" inside computers, rode the resurgence of consumer PC shopping to a profit of $2.3 billion, or 40 cents per share.
That was more than nine times as much as it earned in the year-ago quarter, when profit totalled $234 million, or 4 cents per share.
Intel also posted its highest gross profit margin in history, at 64.7 percent. A higher gross margin number means the chipmaker was able to turn more revenue into profit. It`s a key measure for a manufacturing-intensive company such as Intel because it reflects how well costs are held in check.
Sales climbed 29 percent to $10.6 billion, as Intel sold more chips, many at higher prices than in the past.
Analysts expected a profit of 30 cents per share and $10.2 billion in revenue, according to a Thomson Reuters poll.
Intel is the first major technology company to report its results for the fourth quarter, and it`s seen as a barometer for the PC market and for technology spending in general. Stacy Smith, Intel`s chief financial officer, said in an interview that he believes consumer spending will continue to drive growth in Intel`s business in 2010.
Intel hasn`t yet seen signs that big companies are feeling freer to replace old computers, but Smith said he believes it will happen this year, once the companies have finished testing the new Windows 7 system from Microsoft Corp. that will be installed on most new workplace PCs.
Over the last year, consumers flocked to low-end laptops and the smaller, less powerful "netbooks." Intel said the popularity of those devices, which contain less lucrative microprocessors, hasn`t cut into demand for higher-end chips.
The company`s optimism about 2010 was clear during a conference call Thursday afternoon, when executives said Intel would hire more employees as part of an increased focus on research and development.
Intel also predicts a gross margin of 61 percent for the year, much higher than analysts` forecast for about 55 percent.
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