Intel profits slump as PC sales decline

Intel's sales and profits have slumped as the world's biggest computer chip manufacturer feels the impact of a decline in PC sales.

The company's fourth quarter report shows year-on-year net income fell 27 per cent to $2.5bn, (£1.5bn) down from $3.4bn (£2.1bn) in Q4 2011.

Intel's profits for the year also fell, with the chip manufactur's net income for 2012 dropping 15 per cent to $11bn (£6.9bn,) from $12.9bn (£8.1bn) the previous year. Revenues for the same period dropped 1.2 per cent to $53.3bn (£33.4bn).

"The fourth quarter played out largely as expected as we continued to execute through a challenging environment," said Paul Otellini, Intel's outgoing president and CEO.

"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 datacentre.

"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," he added.

The Intel CEO told analysts the company was preparing to fight back against the rise in mobile device sales at the expense of computers by building next-gen processors for ultra-thin laptops, hybrid devices and tablets.

Forecasts for Q1 suggest revenues of $12.7bn (£8bn), slightly lower than analysts' predictions, with gross margins expected to remain stable at 58 per cent.

Intel has been bit by a decline in PC sales, with figures from IDC suggesting global PC sales fell by 6.4 per cent in the fourth quarter of 2012.

Meanwhile, it's been speculated that Apple is considering dropping Intel as its chip supplier for Mac computers and replacing the Californian firm with chips designed by ARM.