Intel's First-Quarter Net Income Tumbles as PC-Makers Struggle

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By Noel Randewich

Intel forecast June-quarter revenue in line with expectations and trimmed its capital spending plans as the personal computer industry grapples with falling sales and a shift toward tablets and smartphones.

Intel Corp. (INTC) and personal computer makers are struggling to stop a decline in shipments as consumers hold off on buying new laptops in favor of more nimble mobile gadgets.

"These numbers are not very solid, but the second-quarter guidance is better than feared. Conditions are probably not as bad as industry reports have suggested recently," said Doug Freedman, an analyst at RBC Capital.

Under pressure, Intel also said in its quarterly news release on Tuesday that it was reducing 2013 capital spending from $13 billion to $12 billion, plus or minus $500 million.

Intel held firm on its previous forecast that revenue would grow by a low single-digit percentage this year, a target some analysts believe is becoming more difficult to hit.

"That scares the hell out of me. They are holding to the same ultra-bullish forecast they gave before," said Stacy Rasgon, an analyst at Bernstein Research. "They are presumably pretty bullish on the new products they are planning."
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Intel said its first-quarter revenue was $12.58 billion, down from $12.91 billion in the year-ago quarter.

The world's largest chipmaker forecast June-quarter revenue of $12.9 billion, plus or minus $500 million.

Analysts had expected $12.588 billion in revenue for the first quarter and $12.854 billion for the June quarter, according to Thomson Reuters I/B/E/S.

Intel posted first-quarter net income of $2.04 billion, or 40 cents a share, down from $2.74 billion, or 55 cents a share, in the year-ago period. Analysts on average had expected 41 cents per share.

Shares of Intel rose 0.5 percent in extended trade after closing up 2.50 percent at $21.91 on Nasdaq.

(Updated at 4:50 p.m. EDT)

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Intel's First-Quarter Net Income Tumbles as PC-Makers Struggle

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