Intel, the world’s largest maker of chips, is forecasting a $1 billion loss in the second quarter, driven largely by lower sales of its high-end desktop chips.
Key points:Intel is forecasting $1bn loss for second quarter Intel says it sold 10.4 million of its desktop chips to retail customers in the third quarterIntel says it’s been struggling to compete with the likes of Dell and HP in the consumer computing marketIntel says that, with the latest chips, it is now losing money per unit sold”Our second quarter earnings were $1.18 per share, up from $1 per share a year ago, and that’s driven by a lower total sales of our desktop and server processors, our discrete graphics processors and our integrated graphics products,” Intel’s chief financial officer, Andrew Grove, said on a conference call with analysts.
“We’ve seen a significant drop in the amount of revenue we’ve been generating, so we’re actually running a net loss for the quarter.
We’ve been struggling with that.”
While Intel said it expects to see a net profit in the fourth quarter, the analyst noted that it has been “quite difficult to come out of this downturn”.
“I think the fact that we’re running a loss at the end of the quarter, and having to come up with more revenue, I think that is a pretty telling sign that we have a lot of challenges ahead,” Mr Grove said.
“I’m quite optimistic about the outlook for the second half.”
He also noted that Intel had increased its share price since the quarter ended, from $23 to $31.
He said that the company had also experienced a decline in its margins and sales of PCs, which were down 9 per cent in the quarter to $9.1 billion.
Mr Grove also said that Intel would not cut any new jobs as a result of the downturn.
The company also announced a $100 million investment in new manufacturing facilities in Australia.
Despite the negative outlook, Intel remains bullish about its outlook.
“We are still seeing strong demand for Intel products,” Mr Wirth said.
“As long as the industry is healthy, we think it’s going to continue to provide a tremendous amount of value to our shareholders.”
He added that Intel’s “customer growth is very robust”, and that the firm expected to generate “more than $1 trillion in annual sales” for the year to 2018.
Mr Grove said Intel is not seeing the decline in PC sales as it did a year earlier, when it was losing money on its chips.
However, the chipmaker said it was “proud” of its “unprecedented” second-quarter results, which saw its revenue rise 17 per cent.
“As a result, our outlook for next quarter is not only better than our first quarter, it’s higher than our second quarter,” he said.