Intel's Q4, full year earnings not as dismal as expected

UPDATED: Expectations weren't high -- to say the least -- leading up to Intel's fourth quarter earnings announcement after the bell on Thursday.

As analysts and investors feared one of the company's biggest quarterly drops yet, Intel delivered somewhat better-than-expected earnings for the fourth quarter and 2012 overall on Thursday afternoon.

The chip maker reported fourth quarter earnings of $2.5 billion, or 48 cents a share (statement). Non-GAAP earnings were 51 cents a share on a revenue of $13.5 billion.

Wall Street was expecting Intel to report fourth quarter earnings of 45 cents a share on revenue of $13.76 billion.

For 2012 overall, Intel posted earnings of $2.13 per share with revenue of $53.3 billion. Analysts were looking for earnings of $2.11 per share on a revenue of $53.43 billion.

Slumping PC sales worldwide were expected to hold Intel back, but CEO Paul Otellini skirted around the issue in prepared remarks:

The fourth quarter played out largely as expected as we continued to execute through a challenging environment. 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.

Still, quarterly revenue for the PC Client Group was down by 6 percent year-over-year to $8.5 billion. The annual revenue for the unit was also down 3 percent from 2011 to $34.3 billion.

Revenue for the Data Center Group, however, was up both quarterly and annually to $2.8 billion and $10.7 billion, respectively.

For the outlook, Intel is predicting a revenue of $12.7 billion (plus or minus $500 million) at the end of Q1 2013. For the entire calendar year, Intel is only expecting revenue to grow by a "single-digit" percentage.

Looking forward in terms of strategy, a big priority for Intel is finally turning up the heat around its mobile roadmap -- especially in low-end and emerging markets . That plan is expected to be propelled by a pair of low-power chips introduced last week at the 2013 Consumer Electronics Show in Las Vegas.

As for Ultrabooks, Intel executives also promised at CES that new models coming out later this year will be touch-enabled by default and include chips with all-day battery life for the purpose of taking full advantage of Microsoft's Windows 8 operating system.

The long-rumored foundry business is also reportedly a new focus for Intel, as reports earlier today suggested that Cisco has already been signed on as a customer for made-to-order chips.

UPDATE: During the conference call on Thursday afternoon, Intel executives did elaborate a bit more about their PC strategy for 2013, and it looks like the Silicon Valley company is betting big on tablets.

Specifically, Otellini described that this is a result of what he described as the "blurring of form factors" as PC manufacturers are "embracing trends of thinner and lighter notebooks."

Nevertheless, while he acknowledged that they are embracing innovation in terms of design, he asserted that the "performance requirements are going to remain the same."

Otelllini also specified that this mobile strategy for tablets is not the same for smartphones as "the volume of phones" with Intel architectures is still small.