Intel Lowers Revenue Forecast, Remains Cautious

Intel, the world’s largest chipmaker, has lowered its third-quarter revenue outlook and withdrew its full-year financial forecast, blaming reduced demand for its silicon in both enterprise and consumer markets.

The company expects third quarter revenue of around $13.2 billion (£8.3bn), down from its previous estimate of $13.8 billion to $14.8 billion (£8.7bn to £9.3bn).

Intel had already revised its sales forecast for the third quarter once, in July, lowering it by 3 to 5 percent.

When the going gets tough

In its statement, Intel explained that the lowered expectations are a result of shrinking inventories in the supply chain, “softness in the enterprise PC market segment” and slowing demand in emerging markets.

However, the company’s data centre business is meeting targets, and expectations for research and development spending remain unchanged.

The revenue warning sent the company’s shares down 3.2 percent to $24.29 in morning trading on Friday.

Intel’s processors are used in 80 percent of the world’s PCs, but so far, the company hasn’t been successful in introducing its chips into tablets and smartphones.

By the end of 2011, smartphone sales had surpassed those of PCs for the very first time, fuelled by consumers’ growing appetites for Web browsing, content consumption, apps and mobile services. In the same period, it was reported that PC shipments in Europe fell 16 percent year-on-year.

Many analysts predict that the launch of Windows 8 this autumn and the introduction of cheaper Ultrabooks will give the market a much needed boost, with PC sales figures expected to climb through 2014.

Earlier this week, British chip designer ARM holdings warned about slowing sales, while scaling back its employee recruitment efforts.

In August, HP posted its largest ever quarterly loss, partly caused by a huge writedown of its enterprise services business. Its competitor Dell didn’t do much better – overall consumer sales were down 22 percent year-on-year, and consumer notebook revenue fell 26 percent.

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