Intel Beats the Street, Shares Up in After-Hours Trading

(NewsCore) - Intel Corp. on Thursday posted a modest gain in fourth-quarter profit, beating Wall Street's projections.

But in a sign of the chip giant's more aggressive posture, Intel also said it's boosting its capital expenditure to $12.5 billion, plus or minus $400 million, in 2012, or $1.7 billion higher than last year.

"That's a really big number," Bernstein Research analyst Stacy Rasgon said in a phone interview. "They're going pedal to the metal on capacity and process."

Intel shares were up a fraction in after-hours trading. But the announcement prompted a rally in shares of chip tools makers. Applied Materials was up 2.8 percent, while Lam Research gained 2.3 percent and KLA-Tencor added three percent.

The chipmaker reported a fourth-quarter profit $3.4 billion, or 64 cents a share, compared with a profit of $3.2 billion, or 56 cents a share, for the year-earlier period.

Revenue rose 21 percent to $13.9 billion from $11.5 billion. Adjusted income was 68 cents a share.

Analysts had expected the Santa Clara, Calif.-based semiconductor company to post earnings of 61 cents a share, on revenue of $13.7 billion, according to a consensus survey by FactSet Research.

"Our PC Client Group grew 17 percent from a year ago on continued strength in emerging markets as rising incomes increased the affordability of personal computers and on strength from the enterprise market segment," Chief Financial Officer Stacy Smith said in a prepared statement.

For the current quarter, Intel expects revenue in the range of $12.8 billion, plus or minus $500 million. The midpoint of the range translates to an eight percent decline from the fourth quarter. That's roughly in-line with consensus projections. Analysts were expecting revenue of $12.8 billion, according to data from FactSet Research.

Smith said Intel's higher capital spending was "primarily driven by higher factory construction spending as we put in place 14 nanometer manufacturing capacity."

On a call with analysts, Smith called 2012 "an investment year for us." But he also said that while spending is expected to rise as a percentage of revenue in 2012, "We expect it will come down over time."

"We are making some significant but prudent incremental investments in some critical areas," Smith said.