At the same time, the company took the opportunity to lay out an aggressive product launch plan this year, and said it would stay in the communications market even though that sector is not currently contributing to profits.

Sales for the quarter ending December 28 were $7.2bn, up 2.5% on the year. Operating income was $1.5bn, up 45.2%, while net income was $1bn, up 108.1%. Earnings per share came in at $0.16. Gross margin was 51.6%. For the full year, sales were $26.8bn, up 0.8%, while operating profits grew 94.2% to $4.4bn, and net income came in at $3.1bn, up 141.4%.

The vendor described the fourth quarter figures as surprisingly good. In December, Intel forecast sales of $6.8bn to $7bn, with gross margin at the upper end of 49% give or take a couple of points. That was a rise on its original forecast of sales of $6.5bn to $6.9bn, with gross margin of 49% plus or minus a couple of points.

In the first quarter, Intel expects revenues of $6.5bn to $7bn with gross of margin of 50% plus or minus a couple of points. Full year gross margin should be 51% plus or minus a couple of points.

Intel said it benefited from higher average selling prices of CPUs, as it shipped more mobile and server processors.

While this might suggest a refiring of demand from corporate customers, the company was wary of declaring any widespread revival of business sales. Paul Otellini, Intel’s president and COO, said there were points of light in corporate demand, but no overall pattern. That said, he repeated the company’s belief that the corporate installed base was aging and would have to be replaced soon.

Similarly, CFO Andy Bryant said that while the fourth quarter was a pleasant surprise, we don’t see major shift in the market. But Bryant said better than expected sales in the year ahead would deliver considerable upside for gross margin.

As is traditional, the vendor’s processor business accounted for the bulk of sales, at $5.9bn, and all of its operating profits, at $2bn. Despite this, Otellini said there was no question over the company’s long-term plan to dominate the communications business. This business has a great future. We not backing off. We’re committed to it.

At the same time, Otellini sketched out an aggressive product strategy for the CPU business in the coming year. The company will soon launch a Pentium 4 chipset offering an 800Mhz front side bus, amongst other features. He said the company was qualifying its 90nm technology for launch in the middle of this year, and said the design of new generations of its desktop and mobile processors taking advantage of 90nm were now complete. With the launch of Banias this quarter, he added, the vendor’s other Pentium-based mobile architectures would be rapidly eclipsed. The bulk of volume will be Banias.

Source: Computerwire