Intel Corp, the world’s largest maker of chips for PCs, on Wednesday backtracked from a previous optimistic outlook and said it expected sales this year to be flat.
Earlier this year, the company had put a brave face on the decline of global PC sales, saying it still expected its sales to grow.
Intel is now hoping that sales of processors for servers, tablets and smartphones will compensate for the drop-off in PC sales. The downward revision of the company’s outlook is an admission that Intel chips have not made it into many mobile devices.
“I’ve made it Intel’s highest priority to create the best products for the fast growing ultra-mobile market segment,” CEO Brian Krzanich said in a statement.
Krzanich said the company has been slow to respond to the shift in consumer spending from PCs to tablets and smartphones, but intends to make up for lost time.
The company will now place as much importance on “Atom” processors for ultra-light laptops, tablets and phones as it does on the much higher-priced “Core” processors that are used in PCs. The latter have generated the majority of Intel’s revenue for years.
The company is bringing out a major update of its Atom processors, code named “Bay Trail,” later this year.
The Santa Clara, California-based chipmaker said revenue for the period between April and last month was US$12.8 billion. That was down 5 percent from a year ago and just below the company’s projections and the US$12.9 billion forecast by analysts polled by FactSet.
Net income for the quarter was US$2 billion, or US$0.39 per share, reflecting a 29 percent drop from a year ago.
Intel shares fell US$1, or 4.2 percent, to US$23.15 in extended trading after the release of the quarterly results.
For the third quarter, Intel expects revenue of US$13.5 billion, plus or minus-US$500 million. Analysts have predicted US$13.7 billion.
Worldwide PC shipments fell 11 percent in the quarter, according to data from research firms Gartner Inc and International Data Corp, as people continued to migrate to tablets and other mobile devices.
It is the fifth consecutive quarter of decline, making it the longest slump in PC history, according to Gartner. Previous sales declines were related to recessions, this is the first time the PC is yielding to new devices.
However, Intel revealed a notable win in the quarter: It got one of its chips into an Android-based Samsung Electronics Co tablet, replacing a chip based on technology from Britain’s ARM Holdings PLC.