Intel CEO Brian Krzanich is likely to miss revenue target for 2013 as the computer chip major lowered its forecast.
The company on Thursday said revenue for 2013 will be approximately flat year-on-year, down from prior expectations of low single digit percentage increase.
Intel’s new forecast reflects IDC’s recent PC market prediction that says global PC shipments will decrease 7.8 percent in 2013.
IDC’s new forecast reflects a shift in PC buying trends as users increasingly consider alternatives such as delaying a PC purchase or using tablets and smartphones for more of their computing needs. Intel is yet to gear up to face challenges in both tablet and smartphone space.
Intel’s gross margin percentage will be 59 percent, down from prior expectations of 60 percent.
The company will also spending less on R&D and MG&A. Intel’s R&D plus MG&A spending will be down by $200 million to $18.7 billion.
Full-year capital spending will be around $11 billion, down $1 billion from prior expectations.
However, the new CEO is trying to bring energy into the system. He says that he has listened to a wide variety of views about Intel and the industry from customers, employees and leadership team in the last two months.
Intel second-quarter revenue of $12.8 billion, operating income of $2.7 billion and net income of $2 billion does not reflect the full potential of the new CEO since he spent around 2 months at the company. ( Intel appoints Brian Krzanich as CEO and Renée James president )
“Looking ahead, the market will continue buying a wide range of computing products,” said Intel CEO Brian Krzanich.
Intel may take more time to improve its sales as IDC says there will be 1.2 percent decline in 2014 PC shipments with shipment volume reaching 333 million in 2017 – still below the 349 million shipped in 2012 and a peak of more than 363 million shipped in 2011.
Intel Atom and Core processors and increased SOC integration will be Intel’s future.
Intel’s highest priority is to create the best products for the fast growing ultra-mobile market segment.
Intel’s new strategies on mobile computing devices will pave way for further revenue growth. But it will depend on what competition is doing.
Tablet shipments are expected to grow 58.7 percent year over year in 2013 reaching 229.3 million units, up from 144.5 million units last year. IDC now predicts tablet shipments will exceed those of portable PCs this year, as the slumping PC market is expected to see negative growth for the second consecutive year. In addition, IDC expects tablet shipments to outpace the entire PC market (portables and desktops combined) by 2015.
Meanwhile, there’s sequential growth in several Intel business segments. But revenue growth dipped year-on-year basis.
PC Client Group revenue decreased 7.5 percent to $8.1 billion in Q2.
Data Center Group revenue was flat at $2.7 billion.
Other Intel Architecture Group revenue decreased 15 percent to $942 million.
|Q2 2013||Q1 2013||vs. Q1 2013|
|Revenue||$12.8 billion||$12.6 billion||up 2 percent|
|Gross Margin||58.3 percent||56.2 percent||up 2.1 pts.|
|Operating Income||$2.7 billion||$2.5 billion||up 8 percent|
|Net Income||$2.00 billion||$2.05 billion||down 2 percent|
|Earnings Per Share||39 cents||40 cents||down 3 percent|
In Q3, Intel revenue will be around $13.5 billion.