Intel's Earnings Will Reveal Weakness in PCs

Wednesday, 16 Jan 2013 | 1:31 PM ET
Attendees inspect Intel UltraBooks during the 2013 International CES at the Las Vegas Convention Center.
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Attendees inspect Intel UltraBooks during the 2013 International CES at the Las Vegas Convention Center.

What's happening to the PC?

On Thursday afternoon when chip giant Intel reports fourth quarter earnings, we'll get a much better idea.

Almost right up until the second half of 2012, Intel had been able to thrive despite the fact that consumers in developed markets like the U.S. and Western Europe just weren't buying as many computers as they used to. Bolstering Intel were the twin trends of companies buying new laptops and servers, and families in emerging markets buying PCs as they move into the middle class.

Today those friendly trends are in question.

Intel Earnings: Check the PC Market
CNBC's Jon Fortt offers a preview of tomorrow's Intel earnings announcement. Has the company managed to make a dent in the tablet and smartphone markets?

Intel is expected to report earnings per share of 45 cents on revenue of $13.76 billion. And according to third-party research firm Gartner, worldwide PC sales slid 4.9 percent in the same quarter. With that backdrop, the overall performance of Intel's PC Client Group is key to understanding the overall market. For Intel's stock though, the company's full-year guidance on gross margins and capital expenditure probably matters more.

Investors will also be looking for signs of optimism from Intel CEO Paul Otellini and his team.

Last quarter Intel executives said they'll be working with the supply chain to lower the price of touch screen components. The idea here: The sooner PC OEMs can offer touch laptops at the $500 to $600 mainstream sweet spot, the sooner Windows 8 will truly spur consumer demand.

Longer term, analysts will be looking for better evidence that Intel can gain ground in tablets and smartphones, where so far the chip giant hasn't made a dent. That's no easy task: With the latest chip announcements last week from mobile rival Qualcomm, the goal posts keep moving.

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  • Matt Hunter is the senior technology editor at CNBC.com.

  • Cadie Thompson is a tech reporter for the Enterprise Team for CNBC.com.

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.

  • Jon Fortt is an on-air editor. He covers the companies, start-ups, and trends that are driving innovation in the industry.

  • Lipton is CNBC's technology correspondent, working from CNBC's Silicon Valley bureau.

  • Mark is CNBC's Silicon Valley/San Francisco Bureau Chief covering technology and digital media.