SAN FRANCISCO—Intel Corp. Tuesday (July 17) cut its target for 2012 sales growth, citing macroeconomic uncertainty and reduced projections for consumer spending in the second half of the year.
Intel (Santa Clara, Calif.) said it now expects sales for 2012 to be between $55.6 billion and $58.7 billion, up 3 to 5 percent from 2011. The firm had previously said it expected sales for the year to increase by a high single-digit percentage compared with 2011.
The sales target cut came after Intel announced second quarter sales and profit in line with consensus analysts' expectations.
"Overall, our business in the first half was consistent with our expectations," said Paul Otellini, Intel's president and CEO, in a conference call with analysts following the second quarter report. But Otellini added that consumer spending growth is not forecast to recover as soon as expected in the second half of the year.
"What we had expected that we would see by now was that the U.S. and Europe consumer businesses would have recovered by now from a softness we have been seeing for several quarters," Otellini said. This is expected to translate into lower-than-expected PC sales, Otellini said.
But Otellini added that Intel still expects growth in all geographies in 2012 and continues to forecast a stronger second half of the year than results for the first half of the year.
Stacy Smith, Intel's chief financial officer, said Intel is slowing hiring and decreasing its planned spending for the year for R&D and sales, general and administrative expenses to about $18.2 billion, down from an earlier projection of about $18.3 billion. The company continues to expect capital spending for the year to be between $12.1 billion and $12.9 billion.
For the second quarter, Intel reported sales of $13.5 billion, up 5 percent from the first quarter of the year and in line with analysts' forecasts. On a year-over-year basis, sales improved from just over $13 billion in the second quarter of 2011.
Intel reported a net income for the second quarter of $2.8 billion in accordance with generally accepted accounting principles, up 5 percent compared to the first quarter and down 4 percent compared to the second quarter of 2011.
The company reported second quarter sales of $8.7 billion for its PC Client Group, up 3 percent from the first quarter. Sales for Intel's Data Center Group grew 14 percent in the second quarter to $2.8 billion, while other revenue for the Intel Architecture Group grew 3 percent to $1.1 billion, Intel said.
Otellini touted Intel's design wins in Ultrabooks—the ultra-low power notebook PC category that Intel pioneered—and said it expects Ultrabooks with price points of $699 to become available in the fall. Otellini also said the ramp of Intel's 22-nm Ivy Bridge chips has been the fastest in its history, now accounting for 25 percent of the company's sales into PCs.
Last week, Advanced Micro Devices Inc.,Intel's smaller rival in the PC processor market, cut its estimate for second quarter sales, citing lower than expected sales in China and Europe and weaker consumer market for PCs.
For the third quarter, Intel said it expects sales to increase to between $13.8 billion and $14.8 billion.