Intel’s posts its fourth straight sales decline in Q2

The world’s largest semiconductor maker Intel has forecast third-quarter sales that may fall short of some analysts’ estimates as a slump in the personal computer market erodes its largest business.

Revenue in the current period will be $13.5bn (€10.2bn) plus or minus $500m, California-based company said.

Analysts on average had predicted sales of $13.7bn, according to data compiled by Bloomberg.

Intel reported its fourth straight sales decline in the second quarter as consumers shunned the PCs that provide the firm with most of its sales, opting instead for tablets and smartphones to get online. A new line of processors from Intel and an update to the Windows 8 operating system from Microsoft might not be enough to revive growth in the second half, said Alex Gauna, an analyst at JMP Securities in San Francisco.

“I think things will continue to be weak,” said Gauna, who has a market perform rating on Intel’s shares, the equivalent of a hold. “They might not get worse, but I haven’t seen the path to how things get better.”

Intel shares had fallen less than 1% to $24.15 at the close in New York. The stock has gained 17% this year, compared with a 28% advance by the Philadelphia Semiconductor Index. In last year’s third quarter, revenue was $13.5bn.

Intel’s second-quarter net income fell 29% to $2bn, or 39c a share, from $2.83bn, or 54c, in the same quarter a year earlier. Sales fell 5.1% to $12.8bn. Analysts had estimated earnings of 39c on sales of $12.9bn.

Yesterday’s earnings announcement is the first for CEO Brian Krzanich, who succeeded Paul Otellini in May. Krzanich has said Intel needs to speed up its efforts to win more orders from makers of phones and tablets. Intel ended the first quarter with a 6% share in tablets, according to Strategy Analytics.

Intel supplied processors for 9 out of every 10 PC-chip-based servers sold in the first quarter, IDC said. That compares with market share of less than 1% in smartphone processors, Strategy Analytics estimates.

The results come at the start of two weeks of earnings reports from the largest US technology firms. Intel’s position in PCs and servers make its earnings a closely watched indicator of demand for hardware.

— Bloomberg