Intel gives lukewarm revenue forecast, shares fall

Thu Jan 16, 2014 5:53pm EST
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By Noel Randewich

SAN FRANCISCO (Reuters) - Intel Corp's earnings missed expectations by a penny in the fourth quarter due to weak spending on servers and the chipmaker gave a lukewarm forecast for first-quarter revenue that did little to dispel concerns about a slowing PC industry.

Intel said on Thursday it overestimated the extent of a recovery in spending among its data center customers and also pointed to political controversy in Washington, DC.

In the December quarter, Intel's PC revenue stayed flat, which it said was slightly better than the company expected.

Microsoft Corp's plan to stop supporting its Windows XP operating system in April had spurred hopes that some corporations will replace employees' PCs. But Intel Chief Financial Officer Stacy Smith said the Windows refresh had a minor impact on the quarter.

Personal computer sales are losing ground to tablets and smartphones - a market Intel has been slow to enter - but some analysts believe the industry's decline is tapering, potentially giving Intel breathing room as it struggles to develop better processors for mobile gadgets.

The company has also bet that sales of high-end server chips will help offset lower revenue from PCs this year, as the proliferation of smartphones creates demand for data centers to provide Internet-based services like video and social media.

But the 8 percent increase in server revenue in the fourth quarter was less than Intel and some analysts expected.

"The incremental nugget we got from Q4 earnings was that datacenter group disappointed again," said Evercore analyst Patrick Wang. "Investors were anticipating a fairly healthy beat and raise."   Continued...

Intel processors are displayed at a store in Seoul June 21, 2012. REUTERS/Choi Dae-woong