Intel reduces growth forecast as iPads take toll on PC industry
TOP chipmaker Intel Corp reduced its growth forecast, reinforcing fears that a wavering global economy and a lack of consumer interest are dampening personal computer sales.
Shaky economies in Europe and the United States and a growing consumer preference for Apple Inc's iPad tablets have been taking a toll on the PC industry.
The world's leading chipmaker on Tuesday cut its 2012 revenue growth forecast to between 3 and 5pc, down from a prior forecast of "high single-digit growth."
That put Intel's outlook in line with many investors' recently reduced expectations and helped cushion a sell-off of its stock.
"As macro events have transpired in the second quarter, people looked at the original high single-digit guidance as being stretched," said Craig Ellis, an analyst at Caris & Company. "The Street would have been concerned had they stuck with that guidance - but they didn't."
Fears that global PC sales may be worse than expected have helped push Intel's shares down about 10pc since the end of April. Intel's stock has recently traded around 10 times expected earnings.
Intel Chief Financial Officer Stacy Smith said consumer spending in Europe and the United States is softer than previously thought.
"At the beginning of the year we would have expected, along with most economists, that economic growth would start picking up and that would lead to an increase in consumer sales. Those expectations are now more muted," Smith said in an interview after Intel posted its second-quarter earnings.
Revenue rose to $13.5bn from $13.03bn in the year-ago period, but fell short of the $13.56 billion expected.
Intel forecast current-quarter revenue of $14.3bn, plus or minus $500m.
Analysts on average had expected $14.60bn, according to Thomson Reuters I/B/E/S.
GAAP net income fell to $2.8bn from $2.95bn in the year-ago period. GAAP earnings per share were 54 cents, below analysts' average forecast of 52 cents.
Intel's report came after its smaller rival Advanced Micro Devices last week slashed its outlook for second-quarter revenue on disappointing sales in Europe and China, where economic growth has recently lost some steam.