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Intel's fourth quarter a bummer, as expected

Profits fall a lot faster than revenues

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Intel helps kick off the high tech earnings season by reporting its financial results for the fourth quarter and full 2012 year, and as Wall Street and Intel top brass had been anticipating, it was not a killer quarter.

It was, perhaps, not as bad as many had expected given the challenges in the PC and server rackets and Intel's lack of traction in smartphones and tablets. In the quarter ended in December, Intel's revenues were $13.5bn, down 3 per cent compared to the year ago period. Gross margins were hammered by 6.5 points to 58 per cent and net income dropped to $2.5bn, falling by 27 per cent.

"The fourth quarter played out largely as expected as we continued to execute through a challenging environment," said outgoing Intel president and CEO Paul Otellini in a statement accompanying the financial figures. And he was ever the Intel cheerleader, which is a CEO's job at any company.

"We made tremendous progress across the business in 2012 as we entered the market for smartphones and tablets, worked with our partners to reinvent the PC, and drove continued innovation and growth in the data center. As we enter 2013, our strong product pipeline has us well positioned to bring a new wave of Intel innovations across the spectrum of computing."

Intel's PC Client Group stomached a 6 per cent revenue decline in the quarter, to $8.5bn, while the Data Center Group, which makes chips and chipsets for servers, storage arrays, and network devices, had a 4 per cent revenue bump to $2.8bn.

For the full year, Intel's revenues were down 1.2 per cent to $53.3bn, and gross margins were only off four-tenths of a point to 62.1 per cent. Net income was nonetheless off 15 per cent for the year to $11bn. ®

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