Intel Q2 Revenue, Earnings Slide, Barely Miss Expectations

Intel’s (INTC) Q2 sales dipped 5 percent year over year to $12.8 billion and its net income slid 28 percent to $2 billion or 39 cents per share, as the company’s financial results continued to reflect its sluggish entry into the mobile market and its attempts to recover lost ground.

Analysts expected the chip maker to come in at $12.9 in revenue and 40 cents per share in earnings, meaning the company’s Q2 performance constituted only a slight miss. Still, some of its business units recorded steeper declines than did the vendor overall. Specifically, Intel’s PC client group’s sales slid 7.5 percent from the same period last year to $8.1 billion while its data center group’s $2.7 billion in revenue dumped 6.1 percent from Q1 although remaining flat year over year. The chip maker’s other architecture groups, at $942 million, fell 15 percent from last year.

Intel chief Brian Krzanich sounded a familiar refrain in explaining the chip maker’s performance for the quarter and its strategy going forward, putting the blame squarely on the company’s failure to recognize the seemingly permanent downturn in PC sales in favor of the market’s move to ultra-mobile computing.

“I understand that we’ve not always lived up to the standard that we have set for ourselves,” he said in an earnings conference call. “Intel was slow to respond to the ultra-mobile PC trend. The importance of that can be seen in the current market dynamic. The traditional PC market segment is down from our expectations at the beginning of the year. The ultra-mobile devices like tablets are up.”

“Even more important, there will always be another next big thing. It’s our job to continue to scan for emerging trends, unlocking, participating in and shaping these nascent markets.”

Earlier this month, Krzanich said Intel will speed up the rollout of mobile processors for smartphones, tablets and wearable devices and that the company will devote more resources to Atom mobile chip production, perhaps moving manufacturing from older production lines to newer plants.

At the earnings conference, Krzanich again said Intel will put more emphasis on Atom-based products, “bringing the full weight of our process and architectural leadership to the Atom family.” While he was careful to acknowledge that Intel has no plans to lighten its Core processor load, the Atom chip will be positioned to compete for “technology leadership for the ultra-mobile space,” he said.

“We will move Atom even faster to our leading-edge silicon technology and focus on the SOC integration of key components like graphics, communications and other devices,” said Krzanich.

Intel issued tepid guidance to $13.5 billion in revenue for its Q3 2013, a 5 percent sales increase on a sequential basis. For the 2013 year, Intel expects revenue to be flat as compared to last year, blaming the slowdown in PC sales.