(Rewrite first paragraph, adds comments from execs, detail on
By Noel Randewich
SAN FRANCISCO, July 15 Intel Corp
believes the worst is over for a personal computer industry
hammered by the mobile revolution.
The Santa Clara, California chipmaker forecast third-quarter
revenue above Wall Street's expectations on Tuesday, sending its
stock 4 percent higher in extended trade.
Investors have pushed shares of PC mainstays Microsoft Corp
and Intel to decade-highs, partly on bets that the
global slump in PC demand that began with Apple Inc's
launch of the iPad four years ago is hitting bottom.
"PCs have stabilized," Chief Financial Officer Stacy Smith
told Reuters after Intel's report. He said he expects shrinking
demand from consumers in China and other developing countries to
rebound, just as it recently has in the United States.
From the end of 2010, the year the iPad was launched, to the
end of 2013, annual global PC shipments shrank a total of 12
percent, according to IDC.
Intel now expects the market's recovery to help it grow its
full-year revenue about 5 percent, slightly higher than prior
Chief Executive Officer Brian Krzanich told analysts on a
conference call that improved demand from companies replacing
old PCs would last at least through the end of 2014.
Also on Tuesday, Intel increased its share buyback program
by $20 billion. It plans to repurchase about $4 billion of stock
in the current quarter, underscoring its confidence in a
turnaround and a growing crop of "two in one" devices with
detachable keyboards and screens.
"My presumption would be that if they're confident enough to
boost it that they see this (PC market) upside maintaining,"
Bernstein analyst Stacy Rasgon said. "God help them if they're
Intel said in a statement it expects third-quarter revenue
of $14.4 billion, plus or minus $500 million. Analysts had
expected $14 billion on average, according to Thomson Reuters
Revenue from Intel's PC group rose 6 percent in the quarter
while its data center group, a big contributor to gross margins,
had revenue jump 19 percent.
Intel has made little progress expanding from the PC
industry into chips for smartphones and tablets. For the second
quarter, Intel said its mobile and communications group's
revenue fell 83 percent to $51 million and had an operating loss
of $1.12 billion.
Intel's second-quarter revenue was $13.8 billion, compared
with $12.8 billion in the year-ago quarter. In June, Intel
revised increased its second-quarter revenue outlook to $13.7
billion, plus or minus $300 million, citing
stronger-than-expected demand for PCs used by businesses.
Intel posted second-quarter net income of $2.8 billion, or
55 cents a share, compared with $2.0 billion, or 39 cents a
share, in the year-ago quarter.
Intel shares closed up 0.70 percent at $31.71 in regular
trade on Nasdaq.
(Reporting by Noel Randewich; Editing by Steve Orlofsky,