UPDATE 2-Intel cuts 2013 revenue forecast, capex as PC industry sags
SAN FRANCISCO, July 17 (Reuters) - Intel Corp cut its full-year revenue forecast and said it is scaling back capital spending as it adjusts to a painful contraction of the personal computer market sales and economic weakness in China, one of its biggest markets.
The forecast and cut in capital spending were announced on Wednesday in the company's quarterly earnings report, the first under new Chief Executive Brian Krzanich. The soft-spoken manufacturing guru took over as CEO in May and faces falling PC sales and a hyper-competitive mobile market.
The company's chief financial officer, Stacy Smith, said in an interview on CNBC that the chipmaker had seen softer sales in China than it had anticipated.
Intel, the world's biggest chipmaker, dominates the PC industry but has been slow to adapt its chips to be suitable for smartphones and tablets, effectively ceding that market to Qualcomm Inc and other rivals.
Faced with slow demand, Intel said it was cutting 2013 capital spending to $11 billion, plus or minus $500 million. The cut follows a similar reduction from $13 billion to $12 billion in April.
Intel said it expects 2013 revenue to be flat from the year before. Last quarter Intel forecast a low single digit percentage increase in 2013.
Bernstein analyst Stacy Rasgon compared Intel's reduction of expectations on Wednesday to a similar "reset" in 2012.
"Last year, they had a come-to-Jesus moment two-thirds of the way through Q3. This time at least they seem to be reacting a bit sooner, but you have to ask if it's enough," Rasgon said.
Global shipments of personal computers dropped 11 percent in the second quarter, the fifth straight quarterly decline in a market that has been devastated by the popularity of tablets.
Intel posted second-quarter revenue of $12.8 billion and said revenue in the current quarter would be $13.5 billion, plus or minus $500 million.
Analysts expected $12.896 billion in revenue for the second quarter and $13.732 billion for the current quarter, according to Thomson Reuters I/B/E/S.
For the second quarter, Intel reported net earnings of $2.0 billion, or 39 cents a share, in line with expectations. That compared with $2.827 billion, or 54 cents, in the same quarter last year.
Shares of Intel fell 1.86 percent in extended trade after closing down 0.41 percent at $24.15 on the Nasdaq.