Intel sales forecast falls short of some estimates on PC slump

Intel Corp, the world’s largest semiconductor maker, forecast third-quarter sales that may fall short of some analysts’ estimates as a slump in the personal-computer market erodes its largest business.
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Revenue in the current period will be $US13.5 billion ($14.64 billion), plus or minus $US500 million, the Santa Clara, California-based company said today in a statement. Analysts on average had predicted sales of $US13.7 billion, according to data compiled by Bloomberg.

Intel reported its fourth straight sales decline in the second quarter as consumers shunned the PCs that provide the company with most of its sales, opting instead for smartphones and tablets to get online. A new line of processors from Intel and an update to the Windows 8 operating system from Microsoft Corp. might not be enough to revive growth in the second half, said Alex Gauna, an analyst at JMP Securities in San Francisco.

“I think things will continue to be weak,” said Gauna, who has a market perform rating on Intel’s shares, the equivalent of a hold. “They might not get worse, but I haven’t seen the path to how things get better.”

Intel shares had fallen less than 1 per cent to $US24.15 at the close in New York. The stock has gained 17 per cent this year, compared with a 28 per cent advance by the Philadelphia Semiconductor Index.

In last year’s third quarter, revenue was $US13.5 billion.

Second Quarter

Intel’s second-quarter net income fell 29 per cent to $US2 billion, or 39 US cents a share, from $US2.83 billion, or 54 US cents, in the same quarter a year earlier. Sales fell 5.1 per cent to $US12.8 billion, Intel said in the statement. Analysts on average had estimated earnings of 39 US cents on sales of $US12.9 billion.

Today’s earnings announcement is the first for Chief Executive Officer Brian Krzanich, who succeeded Paul Otellini in May. Krzanich has said Intel needs to speed up its efforts to win more orders from makers of phones and tablets. The company ended the first quarter with a 6 per cent share in tablets, according to Strategy Analytics.

Intel supplied processors for 9 out of every 10 PC-chip- based servers sold in the first quarter, according to IDC Corp. That compares with market share of less than 1 per cent in smartphone processors, Strategy Analytics estimates.

Earnings Kickoff

Intel’s results come at the start of two weeks of earnings reports from the largest US technology companies. The chipmaker’s position in PCs and servers make its earnings a closely watched indicator of demand for consumer and business hardware.

Signs from the second quarter so far haven’t been positive. Global PC shipments fell 10.9 per cent to 76 million in the period, the fifth consecutive quarterly drop, market researcher Gartner Inc. said last week. Sales slid from a year earlier in all regions, including a 1.4 per cent drop in the US.

Intel’s gross margin, or the percentage of sales left after subtracting production costs, was 58 per cent in the second quarter. That measure of profit will be about 61 per cent in the current period, Intel said, compared with a 60.6 per cent average analyst estimate.

The company’s biggest customers include PC makers Hewlett-Packard and Dell, which together contribute 29 per cent of revenue, according to a Bloomberg supply-chain analysis.

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The original release of this article first appeared on the website of Hangzhou Night Net.


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