Intel Corp. (INTC) said Thursday after the markets closed that its fourth quarter profit jumped 875% from last year, as revenue increased and margins improved amid a strong rebound in the global PC market. The company's quarterly earnings per share also breezed past Wall Street expectations as did its quarterly revenue.
The world's biggest chipmaker reported GAAP net income for the fourth quarter of $2.28 billion or $0.40 per share, compared to $234 million or $0.04 per share for the year-ago quarter.
The latest quarter results include a $1.25 billion charge related to Intel's settlement agreement with rival Advanced Micro Devices Inc. (AMD), which was announced in November. The year-ago quarter results included a $938 million impairment of the company's investments in Clearwire Corp.
Excluding items, non-GAAP net income for the fourth quarter was $3.09 billion or $0.55 per share, compared to $844 million or $0.15 per share in the prior year quarter.
On average, 27 analysts polled by Thomson Reuters expected the company to earn $0.30 per share for the fourth quarter. Analysts' estimates typically exclude special items.
Gross margin for the fourth quarter increased to 64.7% from 53.1% a year ago.
GAAP operating income for the quarter increased 62% year-over-year to $2.5 billion a year earlier, while non-GAAP operating income jumped 143% to $3.7 billion last year.
Santa Clara, California-based Intel said revenue for the fourth quarter rose 28% to $10.57 billion from $8.23 billion in the same quarter last year. fourth quarter revenue grew 13% sequentially. Thirty-seven analysts had a consensus revenue estimate of $10.17 billion for the fourth quarter.
PC Client Group revenue for the fourth quarter rose 26.2% year-over-year to $7.76 billion, with microprocessor revenue up 21.5% and chipset, motherboard and other revenue up 43.5%. This group caters to desktop, notebook, and netbook market segments, and wireless connectivity products.
Intel benefited immensely due to a strong rebound in worldwide PC shipments, signalling an economic recovery. Intel is the world's largest supplier of microprocessors, the brains of personal computers, with roughly 80% of the global market share.
The PC industry performed better than expected as worldwide PC shipments totaled 90.03 million units in the fourth quarter, a 22.1% increase from the fourth quarter of last year, according to preliminary results published Wednesday by Gartner, Inc. (IT).
Intel said Data Center Group revenue for the quarter surged 35.6% year-over-year to $2.02 billion, with microprocessor revenue up 41.7% and chipset, motherboard and other revenue up 9.2%. This segment caters to the server, workstation, and storage computing market segments, and wired network connectivity products.
Intel Atom microprocessor and chipset revenue for the quarter grew 6% sequentially. Atom microprocessors are mainly used in netbooks.
The company noted that microprocessor average selling price for fourth quarter increased sequentially.
About 57% of Intels's revenue in the fourth quarter came from the Asia-Pacific region. Asia-Pacific revenue for the quarter rose 47% to $5.96 billion from $4.06 billion a year ago, while Americas revenue increased 34% to $2.09 billion from $1.56 billion last year and Europe revenue fell 7% to $1.52 billion from $1.63 billion in the prior year quarter. Japan revenue for the quarter totaled $993 million, up from $980 million a year earlier.
For the full year 2009, the company reported GAAP net income of $4.37 billion or $0.77 per share, compared to $5.29 billion or $0.92 per share for the full year 2008.
Non-GAAP net income for the full year 2009 was $6.63 billion or $1.17 per share, compared to $5.90 billion or $1.03 per share in the prior year.
Intel's 2009 annual revenue fell 7% to $35.13 billion from $37.59 billion in 2008.
Analysts expected the company to earn $0.67 per share on revenue of $34.73 billion for the full year 2009.
"Intel's strong 2009 results reflect our investment in industry-leading manufacturing and product innovation," said Paul Otellini, Intel president and CEO.
Looking forward to the first quarter, the company said it expects revenue of $9.7 billion, plus or minus $400 million, and gross margin of 61%, plus or minus 2 percentage points. Analysts currently expect the company to post revenue of $9.35 billion for the first quarter.
For the full year 2010, the company targets gross margin of 61%, plus or minus 3 percentage points, and capital spending of $4.8 billion, plus or minus $100 million.
Although Intel has settled all its litigation with rival AMD, its legal wranglings seem to be unending. Last month, the U.S. Federal Trade Commission sued Intel for allegedly using a dominant market position for a decade to stifle competition and to strengthen monopoly. The company responded by saying it has competed fairly and lawfully, and the FTC's case was misguided.
In November, New York Attorney General Andrew Cuomo filed a federal antitrust lawsuit against Intel, charging that the maker of computer microprocessors paid billions of dollars in kickbacks and threatened computer manufacturers to prevent the sale of competitors' products.
In May, the European Commission imposed a $1.45 billion fine for antitrust violations on Intel, which has filed an appeal against the ruling.
Intel is the first major high-tech company to report fourth quarter earnings. The widespread use of Intel's chips in machines ranging from laptops to supercomputers makes its earnings an indicator of industry demand.
Intel shares, which have traded in a range of $12.05 to $21.55 over the past year, closed Thursday's regular trading session at $21.48, up 52 cents or 2.48%. The stock is currently gaining 24 cents or 1.12% in after hours trading.
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