UPDATE 2-Intel gives lukewarm revenue forecast, shares fall after-hours

Noel Randewich
Thursday, 16 Jan 2014 | 4:50 PM ET

(Recasts first sentence with revenue forecast, adds analysts' comment)

SAN FRANCISCO, Jan 16 (Reuters) - Intel Corp's earnings missed expectations by a mere penny in the fourth quarter and the chipmaker gave a lukewarm forecast for first-quarter revenue, sending its shares lower after-hours as investors continued to worry about a slow PC industry.

Personal computer sales are losing ground to tablets and smartphones but some analysts believe the industry's decline is tapering off, potentially giving Intel breathing room as it struggles to develop better processors for mobile gadgets, a market it has struggled to enter.

One analyst pointed to heightened spending in the first quarter as potentially worrisome.

"You're getting quite a bit less earnings in the first quarter than the Street may have been looking for," said RBC Capital Markets analyst Doug Freedman. "This management team is not running this company to deliver earnings."

In the December quarter, Intel's PC revenue was flat, year over year, which was slightly better than the company expected.

Microsoft Corp's plan to stop supporting its Windows XP operating system in April is causing some corporations to replace employees' PCs. Intel Chief Financial Officer Stacy Smith said the Windows XP refresh had a minor impact on the quarter.

"The PC market was a little stronger than we thought," Smith told Reuters. "What's driving PCs right now are the innovative form factors we've been working on."

Intel posted fourth-quarter net earnings of $2.6 billion, or 51 cents a share, compared with $2.5 billion, or 48 cents a share, in the year-ago quarter as the chipmaker grapples with a shrinking PC industry and finds support from demand for more servers.

Wall Street had expected 52 cents a share on average, according to Thomson Reuters I/B/E/S.

Fourth-quarter revenue was $13.8 billion, compared with $12.5 billion in the year-ago quarter, it said in a statement on Thursday. Intel forecast revenue of $12.8 billion, plus or minus $500 million, for the first quarter, which ends in March.

Analysts had expected $13.72 billion in revenue for the fourth quarter and $12.79 billion for the normally slower first quarter, according to Thomson Reuters I/B/E/S.

Shares of Intel were down 1.73 percent in extended trade after closing 0.5 percent lower at $26.54 on the Nasdaq.

(Editing by Matthew Lewis)

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