Intel Earnings Drop 25%

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Both profits and revenue declined for Intel during the first quarter of the year, thanks in large part to the continued decline in PC sales. However, company executives remain optimistic that new devices will turn the situation around before the end of the year.

The Wall Street Journal’s Don Clark reported, “Intel Corp.’s bottom line continued to suffer from the sagging personal computer market in the first quarter, but the numbers and the company’s outlook for the current period were less gloomy than some analysts feared. The chip maker’s profit dropped 25% on a 2.5% decline in revenue, reflecting declining sales of both desktop and laptop computers that use Intel microprocessors. Intel, as well as longtime partner Microsoft Corp., has been suffering as consumer spending has shifted from PCs to both tablets and smartphones.”

According toSteve Lohr with The New York Times, “The company reported net income to $2.05 billion, a decline of 25 percent from $2.74 billion in the period a year earlier. Intel’s earnings fell to 40 cents a share, compared with 53 cents a share a year ago. The quarter’s performance was just below Wall Street’s average estimate of 41 cents a share, as compiled by Thomson Reuters.”

Jeffrey Burt with eWeek added, “CEO Paul Otellini—giving his last quarterly earnings call before he retires at the end of next month—and CFO Stacy Smith, speaking to analysts and journalists on a conference call April 16, spoke about upcoming Ultrabooks that will run as low as $499 to $599, while offering a range of features such as touch. They also spoke about what they called a ‘market of computing,’ where the distinction between devices such as notebooks, tablets, Ultrabooks and convertible systems disappear, and with its growing range of chip offerings—from Haswell to the upcoming quad-core ‘Bay Trail’ Atom system-on-a-chip (SoC)—Intel will have products for every device, including smartphones. Bay Trail will enable system makers to roll out high-performance notebooks in the $300 to $400 range, according to Smith.”

Noel Randewich with Reuters observed, “Despite persistently weak demand for PCs, Intel held firm on its previous forecast that 2013 revenue would grow by a low single-digit percentage, a target some analysts believe is becoming more difficult to hit. Chief Financial Officer Stacy Smith told analysts on a conference call after Intel’s earnings report on Tuesday that its upcoming Haswell chip, as well as new ultrathin laptops and an improving economy, would revive growth in the second half of the year. ‘That scares the hell out of me. They are holding to the same ultra-bullish forecast they gave before,’ said Stacy Rasgon, an analyst at Bernstein Research. ‘They are presumably pretty bullish on the new products they are planning.'”