Intel Caught Off Guard by Weak PC Sales, Slashes Q3 Sales Forecast by a Billion Dollars

Paul Lilly

Intel , the world's largest semiconductor maker, took a mighty big chisel to its third-quarter sales forecast and chipped off about a billion dollars due to "softness in the enterprise PC segment" and "weaker than expected demand in a challenging macroeconomic environment." The chipmaker had previously forecast third-quarter sales to be anywhere from $13.8 billion to $14.8 billion, but now says that $12.9 billion to $13.5 billion is a more realistic target.

According to Intel, customers typically buy more chips in the third quarter as they prepare for the holiday shopping season, but this year they've been cutting back their orders. The only segment Intel said is meeting expectations is the data center business.

Daniel Berenbaum, an analyst at MKM Partners LLC, tells BusinessWeek that the problem relates to PC makers being scared off by increasing demand for tablets.

"The problem is PC makers don't know what to build. The bear case is that this indicates that people are not going to buy PCs, they're buying tablets," Berenbaum says.

Be that as it may, Intel was still able to grow its chip business by 4 percent last quarter, even though shipments of PCs around the world remained stagnant (and actually dropped by 0.1 percent, based on data from Gartner and IDC).

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