SAN FRANCISCO -- Reflecting the deterioration of its core market of semiconductors for personal computers, Intel reported sharply lower fourth-quarter earnings Thursday.
Intel said net income in the quarter fell 26 percent to $2.5 billion, or 48 cents a share, from $3.4 billion, or 64 cents a share, a year earlier. Revenue dropped 3 percent, to $13.5 billion from $13.9 billion.
Nevertheless, Paul S. Otellini, Intel's chief executive, remained positive. "We made tremendous progress," he said in a statement accompanying the earnings announcement. "We entered the market for smartphones and tablets, worked with our partners to reinvent the PC, and drove continued innovation."
Net income was above the expectations of Wall Street analysts. They had expected 45 cents a share and revenue of $13.5 billion, according to a survey of analysts by Thomson Reuters.
Intel, the world's largest maker of semiconductors, has struggled for the last year, as consumers worldwide shift from buying PCs to smartphones and tablet computers.
There were two major PC industry efforts to recharge the market last year, but neither succeeded. One, backed by a large investment from Intel, was in lightweight "ultrabook" laptop computers, many of which had tablet features, like touch screens. These came to market later than analysts had expected, at prices most consumers did not find attractive.
The other, Microsoft's release of its Windows 8 operating system, has also proved a dud with consumers and businesses. When people upgrade to a new operating system, they often buy a new computer.
Despite the setbacks, Intel continues to invest heavily in research and development. The company feels this gives it an edge against other chip makers in the long-term cost of making chips. For 2012, Intel spent $10.1 billion on research and development, up from $8.4 billion in 2011.
This article originally appeared in The New York Times.