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Intel posts a 27 percent drop in fourth quarter profits

Fails to repeat the magic of 2011
Fri Jan 18 2013, 12:01
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CHIPMAKER Intel posted a 27 percent decline in fourth quarter profits to round out its 2012 fiscal year with 15 percent lower net earnings than last year.

Intel came off an exceedingly strong 2011 when it enjoyed significant revenue and profit increases, a performance it was unable to repeat in 2012. The firm posted its fourth quarter financials with revenues down by three percent from a year ago to $13.5bn while quarterly profits fell by 27 percent from last year to $2.5bn.

Intel's fourth quarter results capped a relatively disappointing fiscal year for the firm. Intel's full year 2012 results show the firm had $53.3bn in revenues, down 12 percent from 2011 while profits fell by 15 percent to $11bn with earnings per share falling a 11 percent to $2.13.

Looking beyond Intel's headline figures, the firm's revenue breakdown only confirms a decline in the PC market. The firm saw revenue from its PC Client Group fall by three percent to $34.3bn while its Data Center Group, which includes Xeon chips, increased revenue by six percent to $10.7bn.

Intel CEO Paul Otellini said, "The fourth quarter played out largely as expected as we continued to execute through a challenging environment. 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 datacenter. 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."

Although Intel's 2012 financial figures seem poor in comparison to 2011, it should be noted that the firm surpassed all expectations during 2011 and few analysts were expecting it to repeat the 19 percent increase in profits. That said, Intel faces challenges in 2013 as the PC market is expected to continue its contraction and there are no guarantees on the firm's success in the smartphone and tablet markets, while ARM chip vendors are knocking on the door in the server market. µ


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