SANTA CLARA -- Chipmaking goliath Intel (INTC) reported quarterly sales Thursday that slightly beat Wall Street estimates but earnings that were slightly lower than analysts had expected. The company predicted little change in sales this year.

Intel said it made a profit of $2.6 billion for the fourth quarter of 2013 -- an increase of 6 percent from the same period in 2012 -- and had sales of $13.8 billion, up 3 percent from a year ago. That worked out to earnings of 51 cents a share.

Analysts surveyed by Thomson Reuters generally had expected 52 cents a share on sales of $13.7 billion.

For the year, the Santa Clara company's $52.7 billion in sales was down 1 percent and its $9.6 billion profit off 13 percent from the previous year.

The fourth quarter "was a solid finish to a year of transitions," Intel CEO Brian Krzanich concluded in a conference call with analysts. "We are innovating and bringing products to market at a faster pace." However, he said the company's sales of chips for business computers was less than it had anticipated because "we overestimated the rate of recovery among corporate buyers."

Intel predicted its sales this year would be "approximately flat."

Despite its strong cash flow and some other positives, "we believe Intel's market position remains at risk," said Edward Jones analyst William Kreher, noting that he was concerned relatively few tablets include Intel's products.


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Intel reported its earnings after the stock market's official close, when its shares were down less than half a percent to $26.54. In early after-hours trading, its stock price was down more than 4 percent.

As the world's biggest chipmaker in terms of revenue and one of Silicon Valley's most legendary corporations, Intel's earnings reports are widely watched as a barometer of the overall tech industry's health. Yet after peaking at $14.2 billion in the third quarter of 2011, its quarterly sales consistently have fallen below that figure.

Some of that is due to the sluggish world economy. However, Intel's chip sales have been particularly hurt by declining sales of personal computers, which mostly run on its powerful x86 microprocessors and, to a much lesser extent, those from Sunnyvale-based Advanced Micro Devices.

Last year, shipments of desktop and notebook PCs containing the two companies' x86 chips "suffered the worst decline ever, falling by about 9 percent to 315 million units worldwide," according to a report by market research firm IC Insights. But the report added that "a modest recovery in personal computers this year is expected to slightly strengthen overall sales growth in microprocessors."

Other experts share that view, concluding recently that PC sales appear to have bottomed out, which is partly why J.P. Morgan analysts Tuesday said they boosted their rating of Intel's stock. In addition, the analysts noted that under Krzanich, who was named CEO in May to replace Paul Otellini, "we believe Intel has taken a realistic outlook on the PC market and its growth expectations for the first time in years."

A similar point was made Wednesday by analysts at BMO Capital Markets. While also boosting their assessment of Intel's stock, they said, "at the very high level, we see the company more willing to accept and address the challenges that the company faces."

With PC sales sluggish at best, Intel has been heavily promoting its chips for use in smartphones and tablets -- a market dominated by other companies using a chip design from British-firm ARM Holdings -- as well as everything from industrial uses to wearable devices. Plus, it is spending billions of dollars to beef up its already industry-leading chip-manufacturing capabilities.

However, some analysts are concerned about how much money Intel is devoting to new plants, fearing some of the facilities may wind up underused. Intel recently put off opening a state-of-the-art Arizona chip plant that President Barack Obama had hailed as an example of U.S. manufacturing prowess during a re-election campaign visit in 2012.

Krzanich said work on the factory began three years ago when the PC market was stronger and the company will delay starting it up "until the demand requirement comes about."

Contact Steve Johnson at 408-920-5043. Follow him at Twitter.com/steveatmercnews.