Intel cut its forecast for growth this quarter, reinforcing fears of falling PC sales due to a faltering world economy and lack of consumer interest. The world leader in chip manufacturing, on Tuesday cut its forecast for 2012 revenue growth, between 3 and 5 percent, down from previous expectations of “high growth”. This put Intel’s prospects in line with those of many investors. Fears that global PC sales could be even worse than expected, led to the fall in 10 percent of Intel’s stock since late April. The action group has been marketed recently Intel about 10 times on the expected benefits.
Intel’s chief financial officer, Stacy Smith, said the consumer spending in Europe and the United States is more moderate than previously thought. ”Earlier this year we expected, like most economists, the economy started to grow and conducive to an increase in consumer sales. Those expectations are now more moderate,” Smith said in an interview after Intel publish its second quarter earnings. Revenue rose to 13,500 million dollars (10,997,000 euros), compared to 13,030 million (10.615 million euros) for the period last year, but did not reach the expected 13,560 million (11.046 million euros). The current quarter forecast points to a figure of 14,300 million dollars (11,649,000 euros), about 500 million. Analysts had expected 14,600 million (11.894 million euros) according to Thomson Reuters. GAAP net income fell from 2,950 million (2,400 million euros) to 2,800 million (2,280 million) the previous period. GAAP earnings per share were $ 0.54 (0.43 euros), well below an average forecast of $ 0.52 (0.42 euros). Intel’s report was published after his rival, Advanced Micro Devices, hand cut last week its revenue outlook for the second quarter due to disappointing sales in Europe and China.
MODERATE MARKET
China and other emerging markets have been a key source of growth in recent quarters for chip makers Intel and AMD, and PC makers like Lenovo and Acer, helping to offset weakness in Europe and the United States. “Emerging markets, especially China and Brazil are still growing very well, but are moderating due to adjustments of GDP and currency fluctuations,” said Intel CEO Paul Otellini told analysts at a conference telephone. Smith said that overall spending on IT Company was expanding as expected. Doug Freedman, an analyst at RBC, said Intel’s forecast for this quarter are lower than usual for this time of year. “Demand for PC showing normal seasonal growth in Q3 of at least 9 to 10 percent and Intel’s guidance is comfortably below that,” he said. Intel provides processors to 80 percent of the world’s computers, but has not made significant progress in the market for ‘tablets’ and’ smartphones, a sector that uses chips based on ARM technology, company based in Britain. While the market for ‘tablets’ is still small, the demand for smartphones is growing faster than the PC. Shipments of ‘tablets’ as the iPad, are expected to increase by 90 percent this year, according to IHS iSuppli. Moreover, Samsung Electronics, Texas Instruments and Nvidia are developing many of the processors used in ‘tablets’ and smartphones.
HIGH RANGE ULTRABOOKS
Intel is heavily promoting a new category of ‘ultrabook’ with high-end features such as solid state drives, which are expected to add some flavor to a weak PC market. Many analysts are worried that the touch screens and other high end features in the next ‘ultrabooks’, made by Dell, Asus, Hewlett-Packard and others are too expensive for some consumers. But in his press conference, Intel said it has no plans to reduce prices of its chips to increase the affordability of ‘ultrabooks’, a measure which would affect gross margins. The prediction is pointing to a portable computer market occupied by 40 percent with ‘ultrabooks’. Also, sales of short-term decrease PC until Microsoft releases its new operating system Windows 8 in October. Intel shares fell 1.5 percent in extended trading before paring losses. They ended up about 1 percent to $ 25.38 (20.65 euros) on Nasdaq.