Wknd. KTBuzzon Inspired Living Indulge City Times KT Mobile KT ePaper KT Competitions Subscribe KT
Khaleej Times
Khaleej Times Google Plus Page Khaleej Times Facebook Page Khaleej Times Twitter Page Khaleej Times on Instagram
   
  wknd.
  Indulge
  Inspired Living
  Parent Talk
   
   
  Classifieds
  Properties
  Used Cars
   
Home > Technology
 
Intel revenue forecast short of expectations

(Reuters) / 18 January 2013

Intel Corp’s current-quarter revenue forecast disappointed Wall Street, while a sharp rise in planned 2013 capital spending unnerved investors who expect personal computer demand to dwindle.

The world’s leading chipmaker projected 2013 capital spending at $13 billion, plus or minus $500 million, exceeding many analysts’ estimates.

Some saw the higher capex plan as a bid to increase Intel’s lead in manufacturing technology.

“This is a company that is continuing to spend money to participate in the market. That may concern some investors,” said Doug Freedman, an analyst at RBC Capital.

Analysts also said the capex projection could signal a plan by Intel to open its prized factories to strategic customers.

Some see the higher capex plan as a bid to increase Intel’s lead in manufacturing technology. But others fear that expanding too quickly may create excess capacity that could hurt the bottom line if it has to idle plants.

PC makers are struggling to stop a decline in sales as consumers hold off on buying new laptops in favor of spending on more nimble mobile gadgets.

Microsoft Corp’s  long-awaited launch of Windows 8 in October brought touchscreen features to laptops but failed to spark a resurgence in sales that Intel and many PC manufacturers had hoped for.

Intel foresees first-quarter gross margins of 58 percent, plus or minus two percentage points. Analysts on average expected gross margins of about 56 percent for the current quarter, according to Thomson Reuters I/B/E/S.

It estimated a 2013 gross margin of 60 percent, plus or minus a few percentage points. Analysts on average had expected 59 percent.

“The revenue isn’t going to be there, but the margin and expense control is going to stabilize the bottom line,” said Cody Acree, analyst at Williams Financial. “I think it’s probably a success if you can be flat in an industry that most people expect to be flat-to-down.”

Facing lower demand, Intel said in October it was running factories at less than half of their capacity.

Intel is used to being king of the personal computer market, particularly through its historic Wintel alliance with Microsoft which has led to breathtakingly high profit margins and an 80 percent market share.

But it has struggled to adapt its technology for smartphones and tablets, a market dominated by Qualcomm Inc, Samsung Electronics Co Ltd and Nvidia Corp.

In the fourth quarter, Intel’s revenue was $13.5 billion, compared with $13.9 billion a year earlier. Analysts had expected $13.53 billion in revenue for the fourth quarter.

Intel estimated first-quarter revenue of $12.7 billion, plus or minus $500 million. Analysts expected $12.91 billion for the current quarter.

Net earnings in the December quarter were $2.5 billion, or 48 cents a share, compared with $3.4 billion, or 64 cents a share, year-ago period.

Analysts had expected 45 cents, and said the surprisingly strong performance was partly due to a lower effective tax rate of 23 percent. This was below Intel’s forecast of about 27 percent.

Shares of Intel fell 3.66 percent in after hours trade, after closing up 2.58 percent at $22.68 on Nasdaq.

 

For more news from Khaleej Times, follow us on Facebook at facebook.com/khaleejtimes, and on Twitter at @khaleejtimes

Comments
comments powered by Disqus