Intel pulls back PC market outlook, shares slide

SAN FRANCISCO Wed Jul 20, 2011 6:26pm EDT

The Intel logo is advertised on the side of a computer box at an electronic store in Phoenix, Arizona November 4, 2009.REUTERS/Joshua Lott

The Intel logo is advertised on the side of a computer box at an electronic store in Phoenix, Arizona November 4, 2009.

Credit: Reuters/Joshua Lott

Related Video

Video

Intel chips away at doubters

Thu, Jul 21 2011

Related Topics

SAN FRANCISCO (Reuters) - Intel Corp trimmed its forecast for 2011 personal computer unit sales, warning of softness in mature markets and sending its shares more than 1 percent lower.

The top maker of microprocessors for PCs now expects 8 to 10 percent growth in unit shipments of computers this year, down from the low double-digits it had stuck to earlier in defiance of fears that market momentum was decelerating.

Intel's processors are used in 80 percent of the world's computers, but mobile devices from Apple Inc's iPad to Google Inc Android smartphones are eating into PC sales and Intel is struggling to gain a foothold in the fast-expanding mobile market.

Its Atom division, which caters to a mobile computing market, saw revenue slide 15 percent to $352 million.

"The mature market consumer segment is still soft, but the emerging market consumer segment is healthy and growing," CEO Paul Otellini told analysts on a conference call.

Doubts about high U.S. unemployment, the risk of a European financial crisis, climbing inventories and sluggish PC sales had clouded the second-half outlook for Intel and other chip makers like Advanced Micro Devices.

The tepid forecast and lingering concerns about the second half overshadowed a solid quarter for the chip giant. Its quarterly results and revenue forecast both trumped Wall Street's expectations.

Gains in the second quarter were driven by the PC group, Intel's largest segment, and the data center group, which has been expanding quickly in part because of cloud computing.

INSISTENCE

Intel's upbeat results followed positive quarterly earnings from Apple and International Business Machines Corp earlier this week.

The company foresaw current-quarter revenue of about $14 billion, give or take $500 million, versus the $13.5 billion analysts expect on average.

"When we look across the broader worldwide supply chain for PCs and servers, what we see are inventory levels that are lean out there. People are managing things lean, they're prudent," Intel Chief Financial Officer Stacy Smith told Reuters.

Investors eyeing slow economies and red-hot sales of Apple's iPad 2 in recent months have insisted Intel's outlook for PC growth is overly optimistic. Analysts had warned that Intel at some point may be forced to trim its estimate.

"The primary question investors are going to ask now is where Intel is seeing the fundamental strength in the PC market," said Evercore Partners analyst Patrick Wang. "It's hard to have any confidence in how they are going to deliver 7 percent growth sequentially."

Analysts on average had expected Intel's revenue to rise to $13.5 billion in the current quarter, according to Thomson Reuters I/B/E/S, less than normal growth for this time of year.

Revenue in the June quarter was $13.1 billion, up 22 percent over the year-ago period and above the $12.8 billion expected by analysts, according to Thomson Reuters I/B/E/S.

Non-GAAP net income in the quarter was $3.2 billion, up 10 percent. Non-GAAP earnings per share were 59 cents, beating expectations of 51 cents.

Shares of Intel dipped 1.52 percent to $22.64 in extended trade after closing down 0.3 percent.

(Reporting by Noel Randewich; Editing by Richard Chang)

FILED UNDER:
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article