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Intel cuts growth forecast on weaker revenue

Intel Corp. posted second-quarter revenue of $13.5-billion and net earnings of $2.8-billion, or 54 cents per share, on July 17, 2012, as the personal computer industry wrestles with troubled economies and consumers shift toward tablets.

Steve Marcus/Reuters

Top chip maker Intel Corp. forecast weak current-quarter revenue, reinforcing fears that a wavering global economy and a lack of consumer interest are dampening personal computer sales.

Shaky economies in Europe and the United States and a growing consumer preference for Apple Inc.'s iPad tablets have been taking a toll on the PC industry.

The company also cut its revenue growth forecast for 2012 to between 3 and 5 per cent, down from a prior forecast of "high single-digit growth."

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Intel supplies processors for 80 per cent of the world's PCs but it has yet to make significant progress in fast-growing tablets or smartphones, products that use chips based on technology from the United Kingdom's ARM Holdings.

"The seasonal growth that Intel is expecting is less than normal. That is clearly taking into account global macro conditions," said Doug Freedman, an analyst at RBC. "Normal seasonal PC demand would show [third-quarter] growth of at least 9 to 10 per cent and Intel's guidance is comfortably below that."

The world's leading chip maker said revenue in the second quarter was $13.5-billion (U.S.), up from $13.03-billion in the year-ago period and lower than the $13.56-billion expected.

Intel said revenue in the current quarter would be $14.3-billion, plus or minus $500-million. Analysts on average had expected $14.60-billion, according to Thomson Reuters I/B/E/S.

GAAP net income in the second quarter was $2.8-billion, down from $2.95-billion in the year-ago period. GAAP earnings per share were 54 cents.

Shares of Intel fell 1.5 per cent in extended trade and then edged higher, after closing up 0.99 per cent at $25.38 on Nasdaq.

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