Intel shares plunge 6pc on declining PC sales
SHARES in Intel plunged more than 6pc yesterday after the company issued a bleak outlook for its future amid declining computer sales.
The firm, which employs some 4,000 people at its campus in Leixlip, Co Kildare, said sales were likely to fall for the third straight quarter, after registering a 3pc decline in revenue during the three months to the end of December.
By mid-afternoon in New York the shares were down 6.6pc. The stock has lost more than 15pc in the past year.
The sell-off came even as Intel reported fourth-quarter earnings that beat expectations late on Thursday. Earnings per share of 48c beat forecasts while revenue of $13.5bn (€10.1bn) was broadly as expected.
However, Intel said revenue would be between $12.2bn and $13.2bn in the current quarter.
The company has been caught up in a near-perfect storm of slumping PC sales – its core business – while it has struggled to gain a foothold in the smartphone and tablet business.
Intel plans to spend about $13bn on new plants and equipment in 2013 – more than analysts had projected – to help it cater to growing demand for handsets and tablets. The effort won't quickly help the company compensate for diminishing demand for PCs.
"They are definitely coming from behind and their market is moving away from them," said Patrick Wang, an analyst at Evercore Partners. "They are trying to breathe some life into the PC market."
That $13bn spend, which compares with an average analyst estimate of $9.99bn, raises questions about how the chipmaker will be able to fund such an expansion while maintaining dividend and share buybacks, said Daniel Berenbaum, analyst at MKM Partners. (Additional reporting by Bloomberg)