Intel trimmed its forecast for 2011 personal computer unit sales, warning of softness in mature markets and sending its shares down more than 1 per cent even as its revenue outlook beat estimates.
The top maker of microprocessors for PCs now expects 8 to 10 per cent growth in unit shipments of computers this year, down from the low double-digits it had stuck to earlier in defiance of fears that market momentum was decelerating.
Intel's processors are used in 80 per cent of the world's PCs, but mobile devices from Apple's iPad to Google Android smartphones are eating into laptop sales and Intel is struggling to gain a foothold in the fast-expanding mobile market.
Its Atom division, which caters to a mobile computing market, saw revenue slide 15 per cent to $352 million.
"The mature market consumer segment is still soft, but the emerging-market consumer segment is healthy and growing," CEO Paul Otellini told analysts on a conference call.
Intel's tepid PC forecast and concerns about the economy overshadowed a solid quarter for the chip giant, with quarterly results and revenue forecast both trumping Wall Street's expectations.
The company expects average selling prices for its chips to increase as families in China and other emerging markets that buying their first ever-computers choose fairly high-quality PCs that are built to last.
Intel's upbeat results followed positive quarterly earnings from Apple and IBM earlier this week.
But doubts about high US unemployment, the risk of a European financial crisis, climbing inventories and sluggish PC sales weighed on sentiment - and share prices - of Intel and other chip makers.
Mobile chipmaker Qualcomm raised its quarterly outlook yesterday but investors jumpy about the economy sent its shares 3 per cent lower after hours. Also, Xilinx and Freescale saw their shares fall despite beating estimates.
"It does happen that semiconductor companies are further back in the supply chain and they don't see the end-user demand. They just see the orders coming from their customers and sometimes they can be surprised," said Stifel Nicolaus analyst Kevin Cassidy.
Intel's gains in the second quarter were driven by the PC group, its largest segment, and the data center group, which has been expanding quickly in part because of cloud computing.
Chief executive Paul Otellini said he is confident tablets will not replace small laptop computers, even after Apple's blockbuster iPad sales in the second quarter.
He said Intel, which has failed so far to gain traction in mobile gadgets, will be "hyper competitive" winning space for its processors in tablets using an upcoming version of Microsoft's Windows operating system.
The company foresaw current-quarter revenue of about $14 billion, give or take $500 million, versus the $13.5 billion analysts expect on average.
Revenue in the June quarter was $13.1 billion, up 22 per cent over the year-ago period and above the $12.8 billion expected by analysts.
Non-GAAP net income in the quarter was $3.2 billion, up 10 per cent. Non-GAAP earnings per share were 59 cents, beating expectations of 51 cents.
Shares of Intel dipped 1.78 per cent to $22.58 in extended trade after closing down 0.3 per cent.
Reuters
