SAN FRANCISCO—Thanks to a surprise pickup in PC processor billings in September compared with earlier in the quarter, Intel Corp. Tuesday (Oct. 16) reported third quarter sales that beat the revised target issued by the company last month.
Despite beating the revised target, Intel executives said the company continued to grapple with difficult business conditions brought on by tough macroeconomic conditions, soft PC demand and a reduction in microprocessor inventories across the PC supply chain. The company forecast minimal growth for the fourth quarter and also cut its capital spending estimate for the year.
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Paul Otellini, Intel's president and CEO, said in a conference call with analysts following the quarterly report that the company expects the PC business to grow at about half of its normal seasonal rate in the fourth quarter. "Customers are taking a cautious inventory approach in the face of economic uncertainty and the timing of the Windows 8 launch, Otellini said.
Otellini said the uptick in PC-related billings toward the end of the quarter came as customers began their system production in advance of the Oct. 26 launch of Microsoft's Windows 8 operating system.
Executives said Intel was reducing its capacity utilization in an effort to burn off ballooning inventory, which grew by $400 million in the third quarter. The company reduced its capital spending forecast for 2012 to $11.3 billion from $12.5 billion and said it would re-direct space and equipment devoted to older technologies to manufacture 14-nm chips.
Intel (Santa Clara, Calif.) reported third quarter sales of $13.5 billion, roughly flat compared with the second quarter and down 5 percent compared with the third quarter of 2011. The No. 1 chip vendor reported a net income for the quarter of $3 billion, or 58 cents per share, up 5 percent from the second quarter and down 14 percent compared to the year-ago quarter.
Intel's third quarter sales came in above consensus analysts' expectations of about $13.2 billion, according to Yahoo Finance. Last month, Intel cut its sales target for the third quarter on weak PC sales, saying it expected sales to be about $13.2 billion.
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