New York: Intel Corp. raised its forecast for third-quarter sales Friday, citing a recovery in the computer market.
The world’s largest maker of semiconductors has been suffering from a global slide in demand for PCs as people prefer their tablets or mobile phones and businesses do more in the cloud. In April, Intel said it was cutting 12,000 jobs, or 11% of its workforce, as chief executive officer Brian Krzanich shifts the company’s focus to new segments such as chips for wireless devices.
Now Intel is seeing signs of “replenishment of PC supply chain inventory,” the company said in a statement Friday. It’s also “seeing some signs of improving PC demand.”
Intel’s new forecast is for revenue of $15.6 billion, plus or minus $300 million. The previous projection from the Santa Clara, California-based company was $14.9 billion, plus or minus $500 million. Analysts on average had estimates in line with the company’s original outlook.
Shipments of PCs, a market that provides Intel with more than half of its sales, fell to their lowest level in a decade in the first three months of 2016. The depth and duration of the slump means Intel can no longer fall back on booming demand for server chips or market-share gains against weaker rival Advanced Micro Devices Inc.
Some analysts were hesitant to claim this a turnaround yet.
“PCs are doing better, no doubt about it,” said C.J. Muse, an analyst at Evercore ISI. “I wouldn’t call it rapid change. I think when you look at depleted inventory in the channel plus the pessimistic attitude coming in, we were set up for things to come in a little better than expectations.”
Intel also boosted its forecast for adjusted gross margin by 1 point, now expecting the midpoint at 63%, plus or minus a couple of percentage points.
The shares rose as much as 4.1% and were up 2.7% to $37.53 at 9:48 am in New York. Bloomberg