Intel Takes $1bn Revenue Hit Amidst Slacking PC Market

Intel has had to knock almost $1 billion (£680m) from its Q1 revenue forecast this week as consumers increasingly hold off buying new PCs.

Intel’s shares tumbled more than five percent after the announcement, sparking more worries for other hardware manufacturers struggling in the PC market slowdown. Intel said the revenue cuts were down to “challenging” economic and currency conditions.

Fall

The chipmaker said that its first quarter revenues are expected to hit $12.8 billion, almost seven percent lower than the earlier forecast of $13.7 billion.

Earlier this week, analyst firm IDC forecast that PC shipments would drop 4.9 percent in 2015, with a total of 293.1 million PCs sold. This is a revised forecast from the original 3.3 percent decline being expected. This will be the fourth consecutive decline for the PC market, said IDC.

“The gains in mature regions for 2014 helped stabilize the market, but any opportunity for long-term growth depends on reviving growth in emerging regions, and that seems unlikely with the shift toward mobile devices,” said Loren Loverde, VP of Worldwide PC Trackers.

“Even including 2-in-1 systems would only boost the compound annual growth rate (CAGR) for total PC shipments through 2019 from -1.1 percent to 0.5 percent. Vendors can focus on growth segments of the PC market such as AIO, slim and convertible PCs, or consolidate share, but pressure on pricing and from competing devices will continue to make it a challenging market.”

Windows 10

IDC said that Microsoft’s upcoming operating system Windows 10 would help to relieve some pressure on the PC market, but not by enough. The company said that although the operating system will provide a better experience with a mouse and keyboard (presumably better than Windows 8.x), it is unlikely to boost PC shipments significantly.

Intel said: “The company believes the changes to demand and inventory patterns are caused by lower than expected Windows XP refresh in small and medium business and increasingly challenging macroeconomic and currency conditions, particularly in Europe.

It’s not all doom and gloom for Intel, though, which claimed that its data centre chip supplying business is “meeting expectations”. Intel’s full Q1 earnings are due April 14.

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