updated 1/16/2007 5:25:21 PM ET 2007-01-16T22:25:21

Intel Corp.’s fourth-quarter profit plunged 39 percent as the world’s largest chip maker endured a painful price war with much-smaller rival Advanced Micro Devices Inc. and continued to pay for a massive restructuring.

Still, Intel said Tuesday it sold record numbers of microprocessors and flash memory chips and the company managed to beat analysts’ tepid expectations.

Intel said net income for the period ended Dec. 30 was $1.5 billion, or 26 cents per share, versus $2.45 billion, or 40 cents per share, in the same period a year ago.

Revenue for the quarter was $9.7 billion, down 5 percent from $10.2 billion a year ago.

Excluding one-time charges, Intel said it earned $1.7 billion, or 30 cents per share, beating analyst estimates.

Analysts were expecting the company to earn 25 cents per share on $9.44 billion in revenue for the quarter, according to a survey by Thomson Financial.

“Intel’s product and technology leadership yielded a strong fourth quarter with higher selling prices and record unit shipments in the fastest growing segments of the market,” Intel CEO Paul Otellini said in a statement.

The company said it expected revenue for the first quarter of 2007 to be between $8.7 billion and $9.3 billion, and that gross margin for the full-year 2007 is expected to be about 50 percent, plus or minus a few percentage points. Analysts said the margin forecast came in slightly lower than expected.

The results were announced after the stock markets had closed. In after-hours trading, Intel shares fell 20 cents, to $22.10. Earlier, the companies stock gained 17 cents to close at $22.30.

For the year, Intel said revenues were $35.4 billion, and it earned $5 billion, or 86 cents per share.

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