Intel reports 4% drop in second-quarter profit

PanARMENIAN.Net - Intel Corp. reported a 4% drop in second-quarter profit and lowered its financial guidance for the year, acknowledging weaker demand for personal computers that is affecting many companies in the technology sector, The Wall Street Journal said.

Intel, which makes the chips that serve as calculating engines in most PCs, said it now expects revenue to rise by 3% to 5% this year - down from a prior prediction for "high single-digit" percentage growth.

The company primarily attributed the demand slowdown to a challenging macroeconomic environment. But analysts say PC sales in many countries have also been hurt as some consumers opt for tablets, such as Apple Inc.'s iPad, rather than buying notebook computers that use Intel chips.

The company has responded by promoting the development of Ultrabooks, which are thin, stylish portables that boot up more quickly than existing laptops. But sales of those devices have not taken off yet, in part because pricing remains high and some customers are awaiting for the arrival of Windows 8, the new Microsoft Corp. operating system expected in October, The Journal says.

Net income for the period ended June 30 was $2.83 billion, down from $2.95 billion in the year-earlier period. On a per-share basis, earnings were flat at 54 cents on fewer shares outstanding in the most recent period. Revenue rose to $13.5 billion from $13.0 billion, a bit lower than analysts expected, while earnings per share was a bit higher.

For the current quarter, Intel projected revenue of $13.8 billion to $14.8 billion, bracketing consensus estimates of $14.6 billion. It predicted a gross margin of 63% to 64%, which it said should rise to 64% to 65% for the year.