Intel Beats Wall Street Expectations
Intel Corp. posted a fourth-quarter profit that trounced Wall Street expectations Thursday, as the world’s largest microchip maker became the first major technology company to report results for the period.
The Santa Clara, Calif.-based company reported a profit of $2.3 billion, or 40 cents per share, during the final quarter of 2009. The income was nearly 10 times higher than the $234 million, or 4 cents per share, that Intel reported for the fourth quarter of 2008.
Analysts polled by Thomson Reuters forecasted earnings of 30 cents per share.
“Our ability to weather this business cycle demonstrates that microprocessors are indispensable in our modern world,” said Intel president and chief executive Paul Otellini, in a statement.
Revenue in the PC client group rose 10% in the quarter, in line with analysts’ predictions. During a conference call, Intel chief financial officer Stacy Smith attributed the “modest recovery” to a healthy holiday season and the release of Windows 7.
But an upside analysts weren’t expecting came from a 21% boost in sales in the data center group, which includes products for servers.
For the full year, Intel posted a profit of $4.4 billion, or 77 cents per share, on revenue of $35.1 billion. That compared to earnings of $5.3 billion, or 92 cents per share, on revenue of $37.6 billion in 2008.
“In 2009, Intel had the best low-cost solutions with its Atom chip, which carried them through the year,” said Kevin Cassidy, analyst at Thomas Weisel Partners.
But the encouraging news to Cassidy was in Intel’s guidance going forward.
“Intel is feeling confident about corporate IT (information technology) spending coming back, and they have the best high-end server solutions,” he said. “As corporations upgrade their data centers this year, Intel will benefit. Their timing has been perfect.”
Intel’s Smith also expressed optimism about future sales of the company’s server products.
For the current quarter, Intel expects revenue between $9.3 billion and $10.1 billion. Analysts have forecast it to range between $9 billion and $10 billion.
Despite the upbeat report, the company still faces a legal battle this year. After Intel and rival chipmaker Advanced Micro Devices (AMD, Fortune 500) agreed on a $1.25 billion settlement on their legal feuds over antitrust violations and patent disputes, the Federal Trade Commission filed a lawsuit against Intel in December for alleged anticompetitive practices.
Shares of Intel rose nearly 2% in after-hours trading