March 12, 2015 – Intel Corp slashed its revenue forecast for the first quarter by nearly US$1 billion, saying small and medium businesses did not upgrade from Windows XP operating system as much as the chipmaker had expected.
The world’s largest chipmaker’s shares fell more than 4 percent, dragging down a few other PC-related stocks.
Businesses and consumers were taking an “if it ain’t broke, don’t fix it” attitude to their old PCs, Summit Research analyst Srini Sundararajan said.
Intel has been playing catch-up after falling behind in high-growth areas such as mobile chips as customer spending increasingly moved towards low-cost handsets, tablets and laptops.
Intel, which benefited after Microsoft Corp wound down support for Windows XP operating system in last April, has been trying to offset the impact of the slowing upgrade by providing chips for new gadgets such as “2-in-1s”, a hybrid that can function both as a laptop and a tablet.
PC component suppliers are cutting their inventories below typical levels as they become increasingly conservative about the PC market, Topeka Capital Markets analyst Suji De Silva said.
Sales numbers for original design and equipment manufacturers, especially out of Taiwan, have been declining month-to-month, Wedbush Securities analyst Betsy Van Hees said.
Intel said it expects first-quarter revenue of US$12.8 billion, plus or minus US$300 million. It had earlier forecast US$13.7 billion, plus or minus US$500 million.
Analysts on average were expecting revenue of US$13.70 billion, according to analysts.
BlueFin Research Partners said it estimated total PC shipments of about 75-76 million units for the first quarter, a 8-9 percent decline from the preceding quarter.
Intel also cited “challenging” macroeconomic and currency conditions, particularly in Europe.
The company said the mid-point of its gross margin range will remain at 60 percent, plus or minus a couple of percentage points, as lower PC unit volume is offset by higher platform average selling prices.
Microsoft shares slid 1.3 percent and Hewlett-Packard Co’s shares fell 1.6 percent.
Shares of ASML Holding NV , the world’s largest maker of semiconductor production equipment, fell 1.4 percent.
Shares of chipmaker Qualcomm Inc were down 0.7 percent while those of Nvidia Corp were down 1.4 percent.