Intel Sees Strong Q4, Fueled by New Products, Consumer Demand

Giving hope that the rebound in the IT industry seen in the second half of 2009 will continue into this year, Intel announced that it earned $4.4 billion on $35.1 billion in revenues in the fourth quarter. CEO Paul Otellini touted the new 32-nm PC and server chips in 2010 as hope for the upcoming year, and said he expects consumer demand to remain strong and is optimistic about the corporate space.

Intel finished up a good 2009 with a very strong fourth quarter, helped by a mix of new products and more efficient, lower-cost manufacturing.

In reporting fourth-quarter financial numbers that included $10.6 billion in revenue and a net income of $2.3 billion, Intel officials Jan. 14 pointed to a host of new 32-nanometer PC and server processors and growth in such areas as the embedded market and around its Atom chip as reasons for optimism for 2010.

Intel's strong fourth quarter and 2009-the chip maker earned $4.4 billion on $35.1 billion in revenues-give hope that the recovery in IT industry that's been seen in the second half of 2009 will continue into the new year.

"It was a great year of execution and innovation for Intel," CEO Paul Otellini said during a conference call with analysts and journalists.

The $10.6 billion in revenue was a 28 percent increase over the same period last year, when the global recession really took hold. The $2.3 billion in net income-which took into account the $1.25 billion payment to settle the legal dispute with rival Advanced Micro Devices-was a jump of 875 percent over the fourth quarter in 2008, according to Intel.

Much of the business was driven by consumer spending, led by the notebook space, Otellini said. Still lagging was the corporate space, and both Otellini and Stacy Smith, Intel's chief financial officer, said they expect a gradual increase in enterprise spending over 2010.

Otellini said there was optimism for both the consumer and corporate markets. He pointed to the industry's positive reception to the new dual-core 32-nm Core processors-introduced earlier this month at the Consumer Electronics Show in Las Vegas-as an indication that consumer buying could continue its upswing into 2010, and enterprises now have another reason to consider a refresh of their aging fleet of PCs.

In particular, he touted the new Core i5 and i7 chips, which offer such features as Turbo Boost, which enables users to increase the power of individual processing cores as needed, as well as graphics capabilities integrated onto the chip.

Otellini also said Intel is planning to refresh its entire line of server portfolio with 32-nm processors, and noted the improvements in performance and energy efficiency in the company's upcoming eight-core "Nehalem EX" processor for servers with four or more sockets.

"Nehalem EX represents the biggest leap in performance in the history of the Xeon brand," he said.

Otellini said he expects enterprises will see some of the pressure being taken off their budgets, and that unlike in 2009, they will have good reason to refresh their hardware, whether it's servers or PCs. Still, neither he nor Smith would venture any predictions for corporate spending in 2010.

Intel officials also talked about the company's efforts to grow beyond its core PC and server businesses. Otellini touted the embedded business-which is now a $1 billion business-and the Atom processor, which generated $1.4 billion in revenue for the year, and noted the upcoming smartphone he showed off at CES based on the "Moorestown" chip.

Looking forward, Smith said Intel is projecting first-quarter revenue of between $9.3 billion and $10.1 billion.