Intel shines: 'We have seen a return of consumer demand'

Intel shines: 'We have seen a return of consumer demand'

Summary: Intel reports a strong quarter, far exceeding Wall Street's expectations and painting a picture of a strong 2010.


Intel delivered a stronger than expected fourth quarter and a promising outlook for the next three months. In addition, Intel said consumer demand has returned.

Intel reported fourth quarter net income of $2.3 billion, or 40 cents a share, on revenue of $10.6 billion, up 28 percent from the year ago quarter (statement, preview). Wall Street was expecting earnings of 30 cents a share on revenue of $10.17 billion. The results include a $1.25 billion litigation settlement paid to AMD. Excluding that payment, Intel's earnings would have been 55 cents a share. Simply put, Intel blew away Wall Street estimates under any measure.

In prepared remarks, Intel CFO Stacy Smith said:

We have seen a return of consumer demand and replenishment to normal inventory levels after the precipitous demand drop at the end of 2008 and beginning of 2009. Operationally, the fourth quarter of 2009 was one of our most profitable quarters ever.

The most important aspect of Intel financial picture was the outlook.

For the first quarter, Intel reported revenue of $9.7 billion, give or take $400 million. At the low end, Intel's outlook is in line with the $9.35 billion expected by Wall Street. If Intel comes out ahead it will crush current estimates.

Gross margin for the first quarter is projected to be 61 percent, much higher than the 58 percent expected.

The results and the outlook weren't completely unexpected. IDC's PC unit data pointed to strong results for Intel. In a statement, Intel CEO Paul Otellini portrayed a company firing on all cylinders. Otellini said Intel "generated unprecedented operating efficiencies while growing our traditional businesses and creating exciting new market opportunities, even in difficult economic times."

During a call with analysts, Otellini said there was strength all product lines and all regions, with notebooks leading the way. The value of Nehalem, he said, was evident and that, looking ahead, the rollout of 32-nanometer microprocessors will put the company into a strong position for 2010., starting with a refresh of the entire server line. He noted that the Atom business was doing well - and not just in netbooks but also in "winning new designed for growth initiatives."

For the year, Intel reported net income of $4.4 billion, or 77 cents a share, on revenue of $35.1 billion, down 7 percent from a year ago.

In 2010, Intel is projecting continued momentum. For the year, Intel is projecting research and development spending of $6.2 billion and capital spending of about $4.8 billion. Annual gross margins will be about 61 percent.

By the numbers:

  • Intel ended the quarter with total cash investments of $13.9 billion.

  • Here's a look at the international breakdown:

  • The breakdown by product line:

  • Intel ended the quarter with 79,800 employees.
  • The company paid a $1.45 billion fine to the EU in fiscal 2009 and another $1.25 billion to settle litigation with AMD.

Topics: Intel, Banking, Enterprise Software

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  • Mega Corp...

    Welcome to Mega Corp, low pay, no benefits and
    it is always a brown nose paradise.

    Hard work gets you nothing but more work and
    the brown noser takes all the credit.
  • That consumer demand will vanish pretty soon

    like a typical sucker rally in a bear market.
    • Really? Why?

      Considering much of the consumer market has not updated their hardware in the last 5+ years, and many people now demanding much more from their PC's compared to 5+ years ago, why do you think that the consumer demand for new PC's will slow?
  • Way to go intel, nicely done!

    With W7 spurring massive corporate refreshes for both client desktops/notebooks and IT datacenter server refreshes this is a perfect time for them to widen their lead over AMD with 32nm. And with no looming large lawsuit settlements 2010 looks to be a substantial improvement yet.
    Johnny Vegas
  • They have seen a resurgence of demand

    Mainly because the prices of computers have gotten so LOW compared to the power in them.... the next evolution will be once SSD drives and high-capacity USB flash drives become cheap enough for most people to buy.
  • Intel's behavior makes me ill

    Yeah right. Intel's demand has risen proportionately to
    the underhanded tactics that they have used to keep other
    CPUs off of the market.

    Can anybody spell "EU" and "AMD?"
    • They were wrong...

      But I suspect their success is primarily due to superior technology right particularly in manufacturing. They were first to 300mm wafers and 32nm. Since Core 2 duo they have consistently been faster with lower power and better at over-clocking.
  • RE: Intel shines: 'We have seen a return of consumer demand'

    Intel's figures would agree the US and other countries are rising out of recession quite quickly.
    The US -

    Others -
  • Break Intel monopoly!

    Allow other companies produce Windows CPUs.
  • RE: Intel shines: 'We have seen a return of consumer demand'

    zekuga,good post!