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Embattled Intel says earnings better than expected

·2-min read
Intel reported earnings ahead of expectations as the chip giant prepared for a shakeup with new chief executive

Intel said Thursday earnings topped prior expectations as the computer chip giant faces pressure to come up with bold ways to fend of fierce competition and an activist shareholder.

Intel said it took in $20 billion in revenue during the final quarter of last year, little changed from a year earlier, amid robust sales of personal computers.

The Silicon Valley company reported net income of $5.9 billion in the quarter, down a billion dollars from the same period a year earlier.

Intel said that its board approved an increased cash dividend of $1.39 per share in what may have been a move to placate investor Dan Loeb of Third Point, who has called on Intel to bolster its weakening position in the chip market.

"We significantly exceeded our expectations for the quarter, capping off our fifth consecutive record year," outgoing chief executive Bob Swan said in the earnings release.

"Demand for the computing performance Intel delivers remains very strong and our focus on growth opportunities is paying off."

Revenue for the full year hit $77.9 billion, a record, the company said.

Swan will step down on February 15, yielding the Intel helm to Pat Gelsinger.

The shake-up news came after a December letter to the company from Third Point, led by Loeb.

The hedge fund told the company it should consider outsourcing its manufacturing operations to keep pace with rivals in the sector such as Taiwan-based TSMC and South Korean giant Samsung, among others.

While Intel remains one of the world's leading chip companies, it has lagged behind rivals in the fast-growing segment of mobile devices, and its chips are being phased out by Apple, which is developing its own microprocessors for its Mac computers.

Meanwhile, trends in remote work, school, and socializing driven by the pandemic has revived interest in laptop and desktop computers and increased the need for datacenters, all of which demand chips.

Swan was made interim chief executive in 2018 and appointed permanently the next year after his predecessor Brian Krzanich resigned over a relationship with an employee that violated a company non-fraternization policy.

Gelsinger is currently CEO of software firm VMware but has experience with Intel.

gc/rl