Intel Decline in PC Demand

Intel Corp.’s (INTC) first-quarter profit fell 25% as the chip maker continued to suffer from declining demand for personal computers.

Intel, which supplies chips for most of the world’s PCs, has been grappling with a stark decline in PC sales. Data released last week by two research firms fed pessimism; one of the steepest year-on-year drops in global PC shipments was read as another sign that the growing use of smartphones and tablets is sapping demand for desktops and laptops.

Intel’s business supplying chips for servers has been stronger, and it is also vying for a bigger chunk of the mobile-chip market. The shifts in the industry come as the chip maker is searching for a new chief executive to help define its prospects. Chief Executive Paul Otellini plans to retire in May.Intel

“Amidst market softness, Intel performed well in the first quarter and I’m excited about what lies ahead for the company,” Mr. Otellini said Tuesday. “We shipped our next generation PC microprocessors, introduced a new family of products for micro-servers and will ship our new tablet and smartphone microprocessors this quarter.”

For the latest quarter, Intel reported a profit of $2.05 billion, or 40 cents a share, down from $2.74 billion, or 53 cents a share, a year earlier. Analysts polled by Thomson Reuters were expecting per-share earnings of 41 cents.

Revenue fell 2.5% to $12.58 billion, in line with the company’s January guidance of $12.2 billion to $13.2 billion.

Gross margin, a closely watched figure for Intel and other chip makers, narrowed to 56.2% from 64%.

Sales in the company’s PC client group, which makes up most of the top line, fell 6%, while data-center revenue increased 7.5%. The other Intel architecture segment, which includes mobile chips, posted 9% lower revenue.

Operating expenses rose 2.1% to $4.55 billion.

For the current quarter, Intel expects revenue of $12.4 billion to $13.4 billion, in line with analysts’ consensus estimates of $12.85 billion.

Shares rose 1.6% in after-hours trading to $22.27. Through the close, the stock was up 6.3% so far this year.

Write to Kristin Jones at

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