Intel drops on 2014 sales forecast that’s short of estimates

‘Ultra Fast’

Intel also said gross margin, the percentage of sales remaining after deducting the production costs, will be in the middle of its target range of between 55% and 65%, in line with analysts’ estimates, Chief Financial Officer Stacy Smith said yesterday at a meeting for analysts in in Santa Clara, California.

Intel predicts the PC market, measured by units, to be down in the ‘low single-digit’%, Smith said. While spending on new plants and equipment in 2014 will be little changed from 2013 at around $11 billion, investments aimed at enabling customers to convert to Intel chips in tablets will hurt total profitability, he said.

Intel Vice President Hermann Eul, who heads the company’s mobile division, said Intel will focus on developing parts for a smaller number of phonemakers with large sales volumes. The company isn’t giving up on mobile, he said.

“Of course, we would like to do better,” Eul said at the meeting. “This market is going ultra fast, and the competition is not standing still while we catch up.”

Mobile Market

The smartphone market will pass 1 billion units this year, growing 40% from 2012, according to researcher IDC. Personal-computer shipments are projected to drop 9.7% worldwide this year, IDC said in August.

Intel, based in Santa Clara, has yet to garner 1% of the handset processor market. Krzanich has said the company needs to speed up the delivery of new products for mobile devices. He addressed the tablet market and said the company plans to have chips in sub-$100 devices next year and ship more than 40 million tablet chips.

The PC decline has led some analysts to question Intel’s plan to spend $10.8 billion on new plants and equipment this year, calling for a reduction in next year’s budget.

The semiconductor maker expects the rate of decline in PC shipments to slow as demand improves at corporations and in some developed markets, said Kirk Skaugen, the general manager of Intel’s PC business.

www.bloomberg.com

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