Sat, Jan 18, 2014 - Page 15 News List

Lower Intel sales amid PC slump

‘LESS BAD’:The PC market — the backbone to Intel’s business — is ‘getting better,’ but is ‘still not very good,’ with nothing to ‘jump up and down’ about, analysts said

Bloomberg

Intel Corp, the world’s largest chipmaker, forecast first-quarter revenue that may fall short of some analysts’ estimates as corporate demand fails to reignite personal computer sales.

Revenue will be US$12.3 billion to US$13.3 billion, the Santa Clara, California-based company said on Thursday in a statement. Analysts on average were estimating US$12.8 billion, according to data compiled by Bloomberg.

Consumer notebook PC demand is declining in Asia, and business orders for server chips fell short of Intel’s projections in the fourth quarter, chief executive officer Brian Krzanich said on a conference call.

Even as revenue in the period rose amid a pickup in corporate esktop demand, the lackluster forecast damped optimism for a stronger rebound in the PC market, said Alex Gauna, an analyst at JMP Securities.

“The prevailing view coming in was that things are getting better,” said San Francisco-based Gauna, who has the equivalent of a hold rating on the stock. “The quarterly result and forecast says that things are still not very good.”

In the fourth quarter last year, net income rose 6.4 percent to US$2.63 billion, or US$0.51 a share, from US$2.47 billion, or US$0.48, a year earlier. Sales climbed 2.6 percent to US$13.8 billion.

Analysts on average estimated earnings of US$0.52 on sales of US$13.7 billion.

“It was a return to financial growth for the company,” chief financial officer Stacy Smith said in an interview. “Specific to the PC market, it is getting better, but, consistent with third-party estimates, we’re expecting a small, single-digit decline” in the PC market.

Some investors had expected the company to top average analysts’ estimates, said Stacy Rasgon, an analyst at Sanford C Bernstein & Co.

Some were also optimistic that an improving PC market would cause Intel to be more upbeat in its forecasts, he said.

“People were expecting them to beat and raise, and the guidance was just in line,” said Rasgon, who has the equivalent of a sell rating on the stock. “PCs are less bad — that’s not a reason to jump up and down.”

Sales at the company’s PC chip division were unchanged in the fourth quarter at US$8.56 billion. Operating income at the unit rose 20 percent to US$3.4 billion.

The data center business, which makes chips for servers that dish out and store data, reported sales of US$3 billion, up 8 percent from a year earlier.

Operating income in that division rose 11 percent.

Revenue in the unit that makes other chips, such as those that run smartphones, tablets and industrial devices, rose 8.5 percent to US$1.11 billion, while the division’s operating loss widened to US$620 million.

Earlier this week, the company said it is postponing the opening of a new Arizona plant, though the delay will not reduce its total output.

The chipmaker on Thursday said it plans to spend US$11 billion on new equipment and factories this year.

Intel’s revenue for this year will be little changed from last year, when sales slipped 1.2 percent to US$52.7 billion, the company said on Thursday.

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