Arab Today, arab today intel reduces annual growth target
Last Updated : GMT 16:08:40
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Intel reduces annual growth target

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Arab Today, arab today Intel reduces annual growth target

San Francisco - Arabstoday

Top chipmaker Intel Corporation has 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 cut its 2012 revenue growth forecast to between 3 and 5 per cent, 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 10 per cent 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 $13.5 billion from $13.03 billion in the year-ago period, but fell short of the $13.56 billion expected. Intel forecast current-quarter revenue of $14.3 billion, plus or minus $500 million. Analysts on average had expected $14.60 billion, according to Thomson Reuters. GAAP net income fell to $2.8 billion from $2.95 billion 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. China and other emerging markets have been a key source of growth in recent quarters for chipmakers Intel and AMD, and PC manufacturers like Lenovo and Acer, helping make up for weakness in the Europe and the United States. “Emerging markets, especially China and Brazil, are still growing nicely but are moderating due to GDP adjustments and currency fluctuations,” Intel Chief Executive Paul Otellini told analysts on a conference call. Smith said global enterprise IT spending was expanding as expected, more due to the buildout of data centers powering the Internet than tech infrastructure upgrades by banks or other corporations. Doug Freedman, an analyst at RBC, said Intel’s forecast for the current quarter was less than typical for this time of year. “Normal seasonal PC demand would show Q3 growth of at least 9 to 10 per cent and Intel’s guidance is comfortably below that,” he said. Intel supplies processors for 80 per cent of the world’s PCs but it has yet to make significant progress in fast-growing tablets or smartphones, products that use chips based on technology from British-based ARM Holdings. While the tablet market is still small, demand for the devices is growing much more quickly than for PCs. Shipments of tablets including Apple’s iPad are expected to grow 90 per cent this year, according to IHS iSuppli. Samsung Electronics Co, Texas Instruments Inc and Nvidia Corp make many of the power-efficient processors used in tablets and smartphones. Intel is heavily promoting a new category of “Ultrabook” laptops with premium features like solid-state drives that it hopes will add some zest to a PC market that some see as lackluster compared to tablets and smartphones. Many analysts are concerned that touch screens and other high-end features on upcoming Ultrabooks, made by Dell Inc, Asus, Hewlett-Packard Co and others, will make them too expensive for some consumers. From gulftoday

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