By Don Clark 

Intel Corp.'s fourth quarter income jumped 39% on improved demand for its personal computer and server system chips, but its shares fell as it offered a cautious first quarter outlook.

The Santa Clara, Calif., semiconductor maker's revenue increased 6% from a year earlier and its gross profit margin, or earnings after production costs, was slightly wider than the 65% in the third quarter.

Shares slid 1.9% in after-hours trading on the company's lackluster guidance for the current quarter. Its shares recently were off 68 cents after finishing down 16 cents at $36.19 in 4 p.m. Nasdaq trading.

Intel, the biggest supplier of chips that handle calculations in computers, had suffered as consumer spending shifted from PCs to smartphones and tablets. But its business began recovering last spring, as the threat that tablets based on competing technology would replace PCs at many companies receded.

The company said revenue at its PC client group rose 3%. Revenue at its data center group, which reflects chips for servers, grew 25%.

Intel Chief Executive Brian Krzanich set an aggressive target for grabbing a share of the tablet chip market from rivals that license technology from ARM Holdings PLC, vowing to place Intel chips into 40 million of those devices in 2014.

Intel has paid a heavy price, as it offered subsidies to tablet makers to compensate for their costs of shifting away from ARM technology. Intel on Thursday reported an operating loss for the mobile and communications group of $1.11 billion, bringing the total loss for the year to $4.21 billion.

"We'll improve our profitability in mobile" this year, Mr. Krzanich said.

The company in November said it would fold the mobile and communications group into its PC client segment, but the change hasn't affected Intel's income statement yet.

In all, Intel reported net income for the quarter ended Dec. 27 of $3.66 billion, or 74 cents a share, compared with a profit in the year-earlier period of $2.63 billion, or 51 cents a share. Revenue rose to $14.72 billion from $13.83 billion.

Analysts polled by Thomson Reuters expected per-share earnings of 66 cents and revenue of $14.71 billion.

For the current first quarter, Intel projected revenue between $13.2 billion and $14.2 billion and gross margin of 60%, plus or minus a couple percentage points. Analysts, on average, were expecting revenue of $13.76 billion and gross margin of 61.2%, according to Thomson Reuters.

For the year, Intel projected revenue to rise by a mid-single digits percentage rate and achieve a gross margin of 62% of revenue, plus or minus a couple percentage points. Analysts, on average, were expecting revenue to rise 4% and gross margin of 63.4%, according to Thomson Reuters.

Tess Stynes contributed to this article.

Write to Don Clark at don.clark@wsj.com

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