NEW YORK (AP) — Intel Corp., the world's largest maker of chips for PCs, on Wednesday reports its results for the second quarter amid a sharp decline in PC sales.
WHAT TO WATCH FOR: Intel supplies four out of five PC processors, so the global shift in consumer spending from PCs to tablets and smartphone is hurting sales. But the company says that will be offset by rising sales of chips for servers, and the expansion of its toehold in phones and tablets. As recently as April, it projected a slight increase in sales this year.
On Wednesday, we'll see if Intel sticks to its annual forecast, which points to a recovery in the second half of the year. For the second quarter, Intel expects a sales decline of 4.5 percent from last year. That would be the fourth straight quarter of decline for the company — the first such stretch since the recession that started in 2008.
Worldwide shipments of personal computers fell 11 percent in the April-June period, according to data from research firms Gartner and IDC, as people continued to migrate to tablets and other mobile devices. It's the fifth consecutive quarter of decline, making it the longest slump in PC history, according to Gartner. Previous sales declines were related to recessions; this is the first time the PC is yielding to new devices.
Intel is trying hard to get into those devices, and scored a win in the quarter as it got one of its chips into an Android-based Samsung tablet, replacing a phone-style chip based on technology from Britain's ARM Holdings PLC.
Intel also got a new CEO in the quarter. Paul Otellini gave surprise notice in November. In May, Intel named Chief Operating Officer Brian Krzanich, 52, as his replacement.
WHY IT MATTERS: Intel is the world's largest maker of PC chips, and its results are often a bellwether for other chip companies. Its stock is one of the 30 in the Dow Jones industrial average.
WHAT'S EXPECTED: Analysts expect earnings of 39 cents per share on $12.9 billion in sales, matching the Santa Clara, Calif., company's own forecast.
Intel usually gives a revenue forecast for the new quarter. Analysts are expecting $13.7 billion for the period ending in September.
LAST YEAR'S QUARTER: In the second quarter of 2012, Intel earned 54 cents per share. Sales were $13.5 billion.