Sales at Intel are expected to fall for the third straight quarter, as the company continues to struggle in a changing industry that has seen a definite swing towards mobile devices.
Sales in the current period may decline, Intel said, after reporting a 3 per cent drop last quarter. That followed a 5 per cent decline in the September quarter.
The company has been hit by a fall in the demand for PCs, an industry in which it has dominated for several years, and a failure to gain a foothold in the mobile and tablet markets.
Sales of $13.5 billion last quarter matched average predictions of analysts, according to data compiled by Bloomberg. Net income fell to $2.47 billion, or 48 cents a share, compared 45 cents projected by analysts.
“I don’t think things will get better in PCs,” said Cody Acree, an analyst at Williams Financial Group in Dallas. For growth in the PC market this year.”
Revenue
According to its latest results, revenue from its PC client group revenue fell by 1.5 per cent to $8.5 billion in the fourth quarter of last year. Year over year, that was a 6 per cent drop.
However, its data centre group saw revenue rise by 7 per cent quarter on quarter to $2.8 billion, a year-on-year rise of 4 per cent.
Intel, which employs more than 4,000 people in Ireland, plans to spend about $13 billion on new plants and equipment in 2013, more than analysts had projected, to help it cater to growing demand for handsets and tablets.
Intel Ireland, meanwhile, is expected to play a role in manufacturing new chips. Last month general manager of Intel Ireland Eamonn Sinnott said the Irish operation is still “on the roadmap” for the 14 nanometre chip, with Arizona already announced as a manufacturing location.
“There is no delay, there is no change,” he said. “Paul Otellini has identified Ireland as being on the 14nm and beyond roadmap. There is no change to that.” But the investment in new capabilities won’t quickly help the California-based company compensate for diminishing demand for PCs.
“They are definitely coming from behind and their market is moving away from them,” said Patrick Wang, an analyst at Evercore Partners. “They are trying to breathe some life into the PC market.”
Speculation
Meanwhile, speculation about Dell’s potential buyout continued, with sources claiming Silver Lake Partners is in talks with the manager of Canada’s pension plan and other potential investment partners.
Dell also has formed a special committee to take a close look at any potential deal on the table, multiple sources told Reuters.
Silver Lake has reached out to the $170 billion Canada Pension Plan Investment Board and other investors in its fund, known as limited partners, the people said.
Singapore’s state investor Temasek Holdings Pte Ltd – another prospective equity partner that Silver Lake has tapped – is not interested in joining the consortium, sources said.
While Silver Lake has yet to line up investment partners, the buyout firm has told its bank lenders that it remains very confident about its ability to secure equity financing.
It has been almost 25 years since Dell went public, and if the deal is completed, it will be the largest leveraged buyout in some years. – (Additional reporting: Reuters/Bloomberg)
