Weakness in the global economy will hurt third quarter sales at Intel Corp. (Nasdaq: INTC), and the company is now projecting revenue for the period will be up about $300 million below the midpoint of its previous forecast.
Intel, the world's biggest semiconductor company and a bellwether for the industry, said the lower forecast was due to problems in the general economy. The company has been making up for weakness in the developed countries by tapping growth markets in Asia and emerging regions, but as demand softens in these areas too, sales of personal computers, which account for a bulk of Intel's revenue, have also declined.
"As we enter the third quarter, our growth will be slower than we anticipated due to a more challenging macroeconomic environment," Paul Otellini, president and CEO at Intel, said in a statement.
The company projects third quarter revenue will be approximately $14.3 billion, "plus or minus $500 million" compared with its previous estimate for a midrange of $14.6 billion. It expects gross profit margin will be about 63 percent for the quarter. Full year revenue will be "up between 3 percent and 5 percent year over year, down from the prior expectation for high single-digit growth," the company said in the statement.
For the second quarter, Intel reported net income of $2.83 billion, or 54 cents per share, down from $2.95 billion, in the comparable quarter of 2011. Revenue rose slightly to $13.5 billion from $13 billion. Analysts had expected the company to report earnings per share of 52 cents for the second quarter. Sales were in line with analysts' consensus estimate.
Intel said it will maintain its previous capital spending estimate of $12.5 billion, "plus or minus $400 million," for the full year.