Intel Corp. on Tuesday reported quarterly sales and profit that fell from year-ago results, but still handily beat Wall Street’s forecasts.
The world’s largest chipmaker said third-quarter revenue was $13.5 billion, down 5% from the same period last year. That topped a median estimate of $13.2 billion, according to analysts polled by Thomson Reuters.
Net income for the Santa Clara, Calif.-based company fell 14% to $3 billion. Results included a one-time charge of 2 cents per share. Without the charge, Intel said it earned 60 cents per share. Analysts, who typically exclude one-time items from their estimates, forecast earnings of 49 cents per share.
Weak PC sales helped drive results lower, but positive results from Intel’s data center unit and a much-more-favorable-than-expected tax rate helped the company beat Wall Street’s expectations and hit the high-end of the company’s own — albeit reduced — forecasts for the quarter. Shares of Intel fell 2% after hours.
“Our third-quarter results reflected a continuing tough economic environment,” said Paul Otellini, Intel’s CEO, in a statement. “The world of computing is in the midst of a period of breakthrough innovation and creativity. As we look to the fourth quarter, we’re pleased with the continued progress in Ultrabooks and phones and excited about the range of Intel-based tablets coming to market.”
For the current quarter, Intel said it expects sales of between $13.1 billion and $14.1 billion, in line with analysts’ median forecast of $13.7 billion.
Intel warned investors a month ago that its third-quarter financials would sting, as demand for personal computers had slowed beyond expectations. Intel said corporations are ordering fewer PCs, consumers in emerging markets are sitting on the sidelines, and PC manufacturers are reducing their inventories to meet sinking demand.
Worldwide shipments of PCs fell by more than 8% in the third quarter, according to separate surveys by Gartner and IDC, and they are on pace to fall for the full year, IHS iSuppli predicts — the first time since the dot-com bust of 2001. Accordingly, Intel’s PC microprocessor revenue fell by 8% last quarter.
Intel blamed a weakening global economy for slumping chip sales. As a result, Intel said it plans to cut spending throughout the rest of the year.
The company’s data center chip sales were one of the quarter’s lone highlights, rising 6% year-over-year. A tax rate of 24%, better than the expected rate of 28%, also helped.
Still, chief rival AMD has fared much worse. The company warned investors last week that its third-quarter sales would come in lower than expected. Sales have tumbled, and the stock has matched it — falling by nearly 50% this year.
The decline in PCs is also expected to negatively impact other tech companies reporting earnings this month, including Microsoft on Thursday and even mighty Apple on Oct. 25.
