Intel's Profit Disappoints As PC Sales Slip

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Intel Corp has reported a fall in sales and profit as consumers turn away from PCs - most of which use the company's chips - to smartphones and tablets.

The world's largest chip maker said revenue in the fourth quarter was $13.5bn (£8.4bn), compared with $13.9bn (£8.7bn) a year earlier, and net income was down over 26% to $2.47bn (£1.5bn).

It also announced plans to boost its spending to $13bn (£8.14bn) this year - more than expected.

Some $2bn (£1.25bn) of this investment will go towards research into future manufacturing technology, it added.

Intel’s shares fell over 5% in after-hour trading on Thursday after the release of the results.

The company’s chief executive, Paul Otellini, insisted it had performed well given the broader economic conditions.

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

He assured analysts that in the long-run, the company's investment plans would lower costs.

Intel, known for manufacturing chips used in Microsoft (NasdaqGS: MSFT - news) computers, has struggled to adapt its technology for smartphones and tablets, which are growing in popularity with consumers.

Sales of PCs are slipping - just this week research company Gartner (NYSE: IT - news) found that global PC shipments were down 4.9% in the fourth quarter compared to a year earlier.

And Microsoft's new Windows 8 operating system, launched in October, failed to boost sales in the way that Intel and PC manufacturers had hoped.

As such, Intel is pushing to get its chips into more mobile technology, and Mr Otellini said its new "Atom" processors - used in ten tablet models - have the same or better battery life as the competition.

He also did not rule out manufacturing semiconductors for rival companies, as long as it did not give them an advantage over Intel.

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