Intel’s profit rose only 6 percent in the fourth quarter, the company said Thursday, as the impact of last year’s catastrophic flooding in Thailand, which devastated hard-drive production, began to affect PC sales.
The company posted net income of $3.4 billion, or 64 cents a share, up from $3.2 billion, or 56 cents a share, in the same quarter a year ago.
Intel’s revenue increased 21 percent to $13.9 billion, from $11.5 billion in the year-earlier period.
Intel warned analysts on Dec. 12 that revenue would be weaker than they had predicted.
After the announcement in December, Wall Street analysts lowered their average forecast to 61 cents a share, from 69 cents, on $13.72 billion in revenue.
Intel’s chief executive, Paul S. Otellini, said 2011 was an exceptional year. “The company performed superbly, growing revenue by more than $10 billion and eclipsing all annual revenue and earnings records,” he said in a news release. Intel has said that overall PC demand remains strong in the long term. The company expects the impact of the hard-drive shortage on PC sales to decline by the end of the year.
“Intel is executing quite well,” said Patrick Wang, an analyst with Evercore. “They’re doing everything you would want them to do.”
For analysts like Mr. Wang, however, the biggest surprise of the report was the company’s plans to sharply increase capital expenditures. Intel executives said capital spending would rise to $12.5 billion in 2012 from $10.7 billion in 2011.
The move is seen as an all-out effort to bolster competitiveness in the markets for smartphones and tablet computers, businesses in which products based on the rival ARM architecture have gained an early foothold, leaving Intel scrambling to catch up.
The company is focusing on increasing the sales of its higher-margin chips that are used in ultrathins, the smaller, lighter computers that Intel calls Ultrabooks. Chips for the ultra-thin notebooks, like those sold by Toshiba, Lenovo and Acer, typically cost many times what PC chips cost, in large part because they are more energy-efficient, so profit margins are higher.
Mr. Otellini told analysts that emerging markets continued to drive growth, with two out of three PCs sold into that market today. China now accounts for 20 percent of total PC demand. While 90 percent of households in the United States own PCs, China’s PC penetration rate is only 30 percent, amounting to a huge growth opportunity, he said.
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