Intel pins hopes on Haswell chips as profits drop

Intel maintains turnaround hopes for the release of its Haswell processors, after a profit drop of 25% last quarter

Shona Ghosh Reuters
17 Apr 2013

Intel is continuing to feel the pinch of sliding PC sales, cutting its revenue forecast for the current quarter and recording a 25% fall in profits for the last.

However, the firm is pinning its turnaround hopes on the release of its Haswell chips this quarter. Intel said the new chips could boost PC sales and bring profits back to growth after the second quarter.

"We believe the combination of an improving macroeconomic environment, Haswell coming to the market; ultramobile form factors like Ultrabooks, convertibles, and tablets; and touch-enabled devices leads to a return to growth in the second half of the year," said CFO Stacy Smith.

The consumer switch to tablets and smartphones has resulted in the third straight decline in quarterly profits for Intel. According to IDC, PC sales fell 14% in the first three months of the year, piling pressure on Intel to boost its share in tablets and smartphones.

This, plus Intel’s increased manufacturing costs, meant profits sagged to $2.05 billion from $2.74 billion a year ago, while revenue fell to $12.58 billion from $12.91 billion.

The firm anticipated a drop in revenue for its next quarter of as much as 8% to $12.9 billion, give or take $500 million, in line with expectations. But Intel has kept to its full-year revenue forecast for 2013, forecasting success for Haswell, its upcoming Bay Trail chips for tablets and its server chip business, which boosted sales this quarter.

"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.

Read more about: