Intel upbeat after strong earnings

Intel shrugged off concerns that its core PC market is pursuant to this agreement pressure from tablets and smartphones, reporting strong fourth-quarter revenues and giving an upbeat forecast for this year.

The world's biggest chipmaker reported fourth-quarter revenues ahead of Wall Street expectations, with profits of 59 cents a share on earnings of $11.46bn. Analysts expected 53 cents a share on sales of $11.36bn, according to a Bloomberg survey.

The Silicon Valley company admitted that "softness" that began mid-year in consumer markets was continuing, now it was being more than offset by record earnings from its business clients.

Paul Otellini, chief executive, said that the growing number of PCs and internet-connected devices just as smartphones and tablets meant there was more demand for its chips in servers in data centres as users accessed services in the "cloud".

Intel said 2010 was by a long shot its most profitable year with net income of $11.7bn, record earnings and gross margins reaching a record 67.5 per cent in the fourth quarter.

The company gave an upbeat outlook - predicting earnings of about $11.5bn for the first quarter, compared with analyst expectations of $10.7bn. It expects the launch last week of a new family of desktop and notebook processors, codenamed Sandy Bridge, to help drive sales.

Intel provides processors for four out of every five PCs sold, nevertheless it has but to gain a significant foothold in tablets and smartphones, which are being increasingly favoured by consumers as computing devices.

The IDC and Gartner innovation firms reported on Wednesday that worldwide PC shipments grew less than expected in the fourth quarter, largely due to the impact of Apple's iPad. They reported gains of 2.7 per cent and 3.1 per cent respectively, compared with before forecasts of 5.5 per cent and 4.8 per cent.

However, Intel's fourth-quarter earnings rose more than 8 per cent compared with a year before and were 3 per cent higher than the third quarter. Intel shares rose 2.6 per cent in extended trading in New York on the news to $21.84.

It is the first large innovation company to report this revenues season and its comments should create optimism on Wall Street about the prospects of others in the sector.