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As predicted, the world’s largest maker of computer chips this week announced that consumers’ unwillingness to spend in this slower economy led to drops in its fourth-quarter and annual earnings.

 

Officials at Intel Corporation say revenues from the quarter ended Dec. 31 came to $8.2 billion – a 19 percent drop from the prior three-month period. The results include a $1 billion negative impact from the previously announced reduction in the carrying value of the company’s Clearwire investments.

 

According to Paul Otellini, Intel’s (News - Alert) president and chief executive officer, the economy and industry are in the process of resetting to a new baseline from which growth will resume.

 

“While the environment is uncertain, our fundamental business strategies are more focused than ever,” said Otellini, pictured right. “Intel will continue to extend its manufacturing leadership, drive product innovation, develop new markets and implement operating efficiencies that have already taken more than $3 billion out of our ongoing cost structure since 2006.”

 

For 2008, Intel says it posted revenues of $37.6 billion – down 2 percent year-over-year – as well as operating income of $9 billion, net income of $5.3 billion and earnings-per-share of 92 cents. The company posted a quarterly net income was $234 million and earnings-per-share of 4 cents.

 

As TMCnet reported, the company had said in November that it was expecting to see at least $1 billion less in revenues than earlier projected for the quarter.

 

Officials at Santa Clara, California-based Intel officials said then that tighter consumer spending in this slower economy has affected demand for its microprocessors.

 

“The recent financial crisis affecting the banking system and financial markets and the going concern threats to investment banks and other financial institutions have resulted in a tightening in the credit markets, a low level of liquidity in many financial markets, and extreme volatility in fixed income, credit and equity markets,” company officials say. “There could be a number of follow-on effects from the credit crisis on Intel’s business, including insolvency of key suppliers resulting in product delays.”

 

Other effects from the financial crisis on Intel’s performance include the inability of customers to obtain credit to finance purchases of its products, the inability to obtain short-term financing of Intel’s operations from the issuance of commercial paper, and increased impairments from the inability of investee companies to obtain financing.

 

It isn’t clear what Intel expects from 2009.

 

As Jordan Robertson of the Associated Press reports, Wall Street knew Intel was in trouble because the company twice lowered its quarterly revenue forecast.

 

“So what about 2009?” Robertson writes. “Intel said it doesn’t know when demand will pick back up, so the Santa Clara-based company set the bar low and offered first-quarter guidance at the low end of what analysts were expecting.”

 

Meanwhile, Otellini said that Intel has weathered difficult times in the past, “and we know what needs to be done to drive our success moving forward.”

 

“Our new technologies and new products will help us ignite market growth and thrive when the economy recovers,” Otellini said.

 

The question is: When will that happen?