Intel Corp, the world’s largest chipmaker, said on Tuesday that the weak global economy is slowing its growth and revenue for the current quarter is likely to come in below analysts’ forecasts.
Intel’s second-quarter net income was US$2.83 billion, or US$0.54 per share. That was down 4.3 percent from US$2.95 billion, or US$0.54 per share, a year earlier, as operating expenses rose faster than revenue. Intel has been buying back shares, accounting for the flat earnings per share.
Analysts polled by FactSet were expecting earnings of US$0.52 per share for the latest quarter.
Revenue rose 3.6 percent to US$13.5 billion. Analysts were expecting US$13.54 billion.
The Santa Clara, California, company says it expects US$13.8 billion to US$14.8 billion in third-quarter revenue, with a midpoint of US$14.3 billion, below a consensus forecast of US$14.6 billion.
“As we enter the third quarter, our growth will be slower than we anticipated due to a more challenging macroeconomic environment,” CEO Paul Otellini said in a statement.
Intel chips go into about 80 percent of PCs and into vast numbers of servers as well, making it a bellwether for spending on computers.
Consumer demand in North America and Western Europe is not recovering as fast as Intel expected, Otellini said. Growth in emerging markets such as China and Brazil is also slowing, he said.
For the full year, Intel now expects sales to grow 3 to 5 percent from last year, rather than the “high single digit” level it predicted earlier.
Since PC sales are stagnant globally, Intel wants to latch on to the popularity of tablets and smartphones in a meaningful way. The first smartphones with Intel processors were launched in the quarter in China, France and India.
When it comes to tablets, Intel is counting on Windows 8, due this fall. This touch-oriented update from Microsoft Corp is designed to work well on tablets, as well as PCs. Otellini said more than 20 Windows 8 tablet models are in the works at different manufacturers, based on low-power Intel chips.
In PCs, Intel’s big push this year is in Ultrabooks. It has embarked on its largest marketing campaign in years to support them. Ultrabooks are still relatively expensive, but Otellini said he expected prices to come down to US$699 this fall.