Intel profits nosedive in tough Q4

Chip giant stumbles into new year after disappointing PC sales in 2012's final quarter

Intel spluttered into the new year, with weak PC sales in 2012's closing quarter contributing to a big drop in profits.

The chip maker saw total revenue fall three per cent annually to $13.5bn (£8.5bn) in Q4, with sales in the PC market dropping six per cent to $8.5bn.

Profitability took a big hit in the quarter, with gross margin standing at 58 per cent, compared with 64.5 per cent in the corresponding period in 2011. Consequently operating profit nosedived 31 per cent to $3.2bn.

For the full year, sales declined 1.2 per cent to $53.3bn, with operating profit slipping 16 per cent to $14.6bn. For 2013 Intel is forecasting a "low single-digit percentage increase" in sales, with gross margins hovering around the 60 per cent mark – "plus or minus a few percentage points".

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