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Intel has 17,000 employees in Oregon, more than any other business. It's building two new, multibillion-dollar factories at its Ronler Acres campus in Hillsboro.
(The Oregonian)
Intel's second quarter
Revenues
: $12.8 billion, slightly below Intel's forecast and analyst expectations, and down 5.1 percent from the second quarter of 2012.
Profits
: $2 billion, 39 cents a share. In line with analyst forecasts, but down from 54 cents a share in the second quarter last year.
Outlook
: Intel forecasts third-quarter sales of $13.5 billion, below analysts' consensus estimate of $13.7 billion. For the full year, Intel now expects flat sales -- down from a single-digit percentage increase the company had forecast previously.
The first step in dealing with a problem is acknowledging you have one.
By that measure, at least, Intel's new chief executive is off to a good start.
"I understand that we've not fully lived up to the standard that we set for ourselves," Brian Krzanich told investment analysts Wednesday when discussing the company's second-quarter financial results. "Intel was slow to respond to the ultra-mobile PC trend."
That much was obvious when Intel reported its fourth-straight quarterly sales decline Wednesday afternoon, simultaneously cutting its outlook for the rest of the year.
Intel depends on PC sales for nearly two-thirds of its business, and thus far generates almost no revenue from smartphones and tablets.
With PC sales ebbing and mobile gadgets exploding, Krzanich said Wednesday that he has reorganized Intel's executive structure to make the company flatter, and make its leaders more accountable.
"These elements are critical in the fast-paced, ultra-mobile environment," said Krzanich, a veteran Intel manufacturing executive who won the CEO job in May after a protracted search.
"He's being honest. They were slow. He's admitting it. That's good," said Stacy Rasgon, an analyst who tracks Intel for the investment firm Sanford C. Bernstein.
By investing in mobile technology and advances in manufacturing, Rasgon said that Krzanich is positioning Intel for long-term success. In the short run, though, higher spending at a time of falling sales is likely to turn off investors.
"It looks like they're starting to enter into a fairly significant business model transition, which is painful," Rasgon said.
Intel shares fell 10 cents Wednesday to close at $24.15 before the company reported financial results. Shares dipped another 3.7 percent in after-hours trading.
Though based in California, Intel's largest and most advanced operations are in Oregon. The company has 17,000 employees in the state, more than any other business.
Sales in Intel's PC group fell 7.5 percent in the second quarter, reflecting consumers' shift to tablets and smartphones. The broader PC market has also been restrained by Microsoft's disappointing launch of Windows 8 last fall.
While Intel's second-quarter sales were in line with analyst forecasts, the company projected third-quarter results below market expectations. And for the full year, the world's largest chipmaker said it now expects flat sales instead of single-digit percentage growth.
Apple, Samsung and other smartphone and tablet makers have thus far preferred customizable chips based on designs from Intel rival ARM Holdings. Intel has reserved its most advanced technology for its PC and server chips, making its mobile processor wait as long as two years to get the same improvements in speed and battery life.
Intel is now working to give its mobile processor, Atom, the same tiny circuitry that its other leading-edge chips enjoy. The company won its first major tablet design win last month when Samsung put an Intel processor in the new, 10-inch version of its Samsung Galaxy Tab. On Wednesday, Intel chief financial offer Stacy Smith said the company's tablet sales this quarter will be quadruple what they were in the first quarter.
Even so, Smith said that combined sales of tablets and PCs will likely finish 2013 below last year's levels.
Intel said Wednesday that it's counting on a better global economy during the late part of the year to make up for weak sales early in 2013. But Smith said the company still sees a lot of uncertainty as the third quarter gets under way.
"The tale for us will really be written in the back half of Q3 when we start to see how our customers are putting in place inventory in anticipation of that fourth-quarter selling season," he told analysts. "Right now, our view on that is pretty cautious."
Note: This article has been updated with details from Intel's analyst call and analyst commentary.
-- Mike Rogoway; twitter: @rogoway; phone: 503-294-7699