Intel reports 90-percent earnings drop as chip sales falter


San Francisco : Chip-making giant Intel reported a 90-percent drop in fourth-quarter earnings Thursday as revenues dropped by 23 percent over the same quarter a year earlier.

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The Silicon Valley bellwether reported net income of $234 million, or 4 cents per share, down from $2.27 billion, or 38 cents per share, in the year-earlier period. Sales in the quarter were $8.2 billion, down from $10.7 billion a year earlier.

Intel warned of the sales plunge last week, in the second revision of its original sales forecast, which had been between $10.1 billion and $10.9 billion.

“The slowing of the worldwide economy resulted in a weak fourth quarter,” said Stacy Smith, Intel’s chief financial officer in a conference call with analysts and investors.

The company said it is currently planning for first-quarter revenue of about $7 billion and that it was well positioned for growth.

“While the environment is uncertain, our fundamental business strategies are more focussed than ever,” Intel chief executive Paul Otellini said in a statement. “Intel has weathered difficult times in the past, and we know what needs to be done to drive our success moving forward.”

Intel’s slump was a further reflection of how severely the economic crisis has hit the personal computer market, with sales figures in the fourth quarter of 2008 stagnating for the first time in five years, two US research companies reported Thursday.

Sales figures compared by Gartner Inc to the previous years showed a slight quarterly increase of 1.1 percent to 78.1 million units.

Meanwhile, analysts from IDC identified a shrinking of the market by 0.4 percent in the quarter.

The boom in cheap netbooks failed to offset falling overall demand because of the crisis, according to IDC.

The PC market, however, grew by 10.5 percent over the whole of 2008.