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Intel earnings surge 875 percent

The chipmaker's quarterly earnings jumped on the back of better-than-expected gross margins, which hit a record 65 percent, all despite a series of payouts.

Intel posted a fourth-quarter net income of $2.3 billion, up 875 percent over the same period last year. Revenue came in at $10.6 billion, up 28 percent year over year.

Earnings per share was 40 cents. The analyst consensus for the fourth quarter called for 30 cents a share on earnings of $10.17 billion. Adjusted income came to 55 cents per share.

Intel earnings

Income was about 10 times greater than the $234 million (4 cents per share) that the chipmaker reported in the fourth quarter of 2008.

One of the key financial indicators, gross margin, hit a record 65 percent, Intel said, up 12 points over the same period last year when it was 53 percent.

Revenue for Atom processors and chipsets--which are used widely in Netbooks--shot up 167 percent.

"Our ability to weather this business cycle demonstrates that microprocessors are indispensable in our modern world," said Paul Otellini, Intel president and CEO in a statement.

"Our notebook business was exceptional this quarter," Otellini said during the company's earnings conference call. The chip business for server computers was up too. "Servers had a very strong quarter with a shift toward the high end of the server stack," he said.

Looking ahead to the first quarter of 2010, Intel expects revenue to hit $9.7 billion, plus or minus $400 million. The gross margin percentage is forecast to be 61 percent, plus or minus 2 percentage points.

All this despite the fact that Intel has been under a financial strain because of a series hefty payouts. Intel paid a fine of approximately $1.45 billion to the European Union and agreed to pay AMD $1.25 billion to settle an antitrust case in November.

For all of 2009 Intel posted revenue of $35.1 billion. The company reported full-year operating income of $5.7 billion, net income of $4.4 billion and EPS of 77 cents.

Full-year 2010 Forecast:

  • Gross margin percentage: 61 percent, plus or minus 3 percentage points.
  • Spending (R&D plus MG&A): $11.8 billion, plus or minus $100 million.
  • R&D spending: Approximately $6.2 billion
  • Capital spending: Expected to be $4.8 billion, plus or minus $100 million

Full-Year 2009 Key Financial Information:

  • PC Client Group revenue down 6 percent, Data Center Group revenue down 2 percent, and Other Intel Architecture group revenue down 21 percent, Intel Atom microprocessor and chipset revenue up 167 percent. .
  • Gross margin of 55.7 percent, flat to 2008.
  • EC fine of $1.45 billion and AMD settlement agreement of $1.25 billion.
  • Full-year capital spending $4.5 billion, consistent with the company's expectation

Update at 2:10 p.m. and 2:40 p.m. PST throughout.