Intel's Bottom Line Hurt by Slumping PC Market

Paul Lilly

The Santa Clara chip maker's profit slid 27 percent compared to one year ago.

So the sky might not be falling, but Intel's fourth quarter profit sure did. Intel reported net income of $2.5 billion for the fourth quarter of 2012, down 27 percent from $3.4 billion in Q4 2011. As one might expect, the world's largest chip maker was hurt by a slowdown in PC sales as the market shifts towards mobile devices like tablets, smartphones, and hybrid laptops. Nevertheless, Intel said it wasn't surprised by its Q4 performance.

"The fourth quarter played out largely as expected as we continued to execute through a challenging environment," said Paul Otellini , Intel president and CEO. "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 saw revenue for its PC Client Group drop 1.5 percent sequentially to $8.5 billion, and slip 6 percent year-over-year to $34.3 billion. Meanwhile, Intel's Data Center Group had revenue of $10.07 billion for the year, up 6 percent from 2011, and $2.8 billion in Q4, up 7 percent sequentially.

The challenge Intel now faces is trying to transition to the mobile world where ARM-based processors already have a strong foothold. Intel's performance in 2013 will also depend on how well Windows 8-based devices are able to perform in the market place.

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