Intel's Q4 earnings strong despite Atom revenue drop

Atom year-over-year Q4 revenue drops by 57 percent to $167 million

Intel reported strong revenue and profit growth in the fourth fiscal quarter of 2011, overcoming a sharp drop in revenue from its low-power Atom microprocessors and chipsets used in tablets and netbooks.

The chip maker reported net income of US$3.5 billion for the quarter that ended on Dec. 31, up 11 percent compared to the previous year's fourth quarter. Intel reported earnings per share of $0.68, while analysts polled by Thomson Reuters estimated earnings per share of $0.61.

Intel reported revenue of $13.9 billion, up 22 percent compared to the previous year's fourth quarter.

Though the PC and server segments recorded revenue growth, Atom microprocessor and chipset revenue dropped by 57 percent year-over-year to $167 million. That's a small portion of the overall revenue and Intel hopes to increase Atom revenue by entering the high-volume smartphone market later this year. The company last week said it had signed deals with Lenovo and Motorola Mobility, which will use the Atom chip code-named Medfield in upcoming smartphones.

Most Atom chips now go into netbooks, but that market has been hurt by tablets. Intel's Medfield chip will also be used in tablets starting this year. Intel also hopes to reinvigorate the PC market with ultrabooks, which are thinner and lighter laptops with low-power components and thinner screens.

"With a tremendous product and technology pipeline for 2012, we're excited about the global growth opportunities presented by ultrabook systems, the data center, security and the introduction of Intel-powered smartphones and tablets," Intel CEO Paul Otellini said in a statement.

Revenue for the PC Client Group, which deals in chips and components for laptops and desktops, was $9 billion in the fourth quarter, up 17 percent year-over-year. The Data Center Group, responsible for servers and data-center products, posted revenue of $2.7 billion, up 8 percent year-over-year.

For the first quarter of 2012, Intel is projecting revenue of $12.8 billion, plus or minus $500 million.

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