Intel Slashes 2013 Revenue Outlook As PC Sales Decline

  @TreyeGreen t.green@ibtimes.com on July 17 2013 9:55 PM
Intel Chip 2012 3
An Intel chip presentation. Reuters

Following a drop in PC sales, Intel Corp. on Wednesday reported its fourth straight quarter of sales declines and plans to cut back capital spending. 

The bleak forecast for the world's largest maker of computer chips was announced in the company's quarterly earnings report.

Intel had previously stated that it expected sales growth, but the company is now hoping that the sales of tablets, smartphones and processors for servers will make up for weak PC sales, Reuters reports.

Intel chief executive Brian Krzanich became the company's CEO in May, and he promptly highlighted Intel's shortcomings, specifically the chipmaker's failure to tap into the mobile market. 

"Intel was slow to respond to the ultra-mobile PC trends," Krzanich said. "We will move Atom even faster to our leading-edge silicon technology."

This will require the company to change its focus from mainly the "Core" processors that go into PCs to the lighter "Atom" processors used in smartphones, tablets and ultra-light laptops. 

After the announcement of its quarterly financial results, shares of Intel fell $1, or 4.2 percent, to $23.15 in extended trading.

To expedite the shifting of production to Atom processors, Krzanich said the company's latest fabrication lines would be utilized in their creation. These new production lines can create processors that are more efficient and quicker than those produced with older equipment. 

Stacey Smith, Intel's chief financial officer, said customers are looking for more options when it comes to mobile chip suppliers.

"They want alternatives in a market kind of becoming dominated by one player and they see us as being a very capable supplier," Smith said. "They wanted to look Brian in the eye, and now he's looking back and saying, 'We're going to double our efforts here.'"

Intel said revenue for the period from April to June was $12.8 billion, falling slightly short of the $12.9 billion projected by the company and analysts, CNN reports.

Net income was down 29 percent from one year ago, as it fell to $2 billion in the second quarter. 

Intel said it expects revenue between $13 billion and $14 billion in its third quarter, but the chipmaker anticipates revenue will remain flat for the full year. 

Join the Discussion