Intel's weak outlook for fourth-quarter revenue and margins show that there will be no revival in PC demand towards the end of the year, with the company hoping for a turnaround with the release of new chips for Windows 8 devices.
Intel on Tuesday said its revenue and profit dropped during the third quarter of fiscal 2012 compared to the same period a year earlier, and blamed a tough economy for poor sales of its products.
The company's profit was $2.97 billion for the quarter ending Sept. 29, dropping from $3.47 billion reported in the same quarter last year. The company reported earnings per share of $0.58, or $0.60 excluding one-time items.
"Our third-quarter results reflected a continuing tough economic environment," said Intel CEO Paul Otellini in a statement.
Intel's revenue was $13.5 billion during the third quarter, dropping from the $14.2 billion in the same quarter last year.
Revenue from Intel's server and data center business disappointed. Profitability will also take a hit, as Intel idles excess capacity at its plants in an effort to reduce inventories of its processors.
Intel has been promoting "Ultrabook" laptops with touch screens enabled by Microsoft's upcoming Windows 8. However, Ultrabooks launched so far have not attacted consumers, as they are too expensive, and manufacturers have shipped fewer than expected.
Now the company is banking on Microsoft's launch of Windows 8 later in October to breathe new life into laptops and slow the trend of consumers buying smartphones and tablets instead of PCs.
"I see the computing market in a period of transition," with an opportunity for breakthroughs in research and creativity, Otellini said. New usage models for laptops are emerging with detachable touchscreens, voice recognition and other features, and Intel is trying to tap into those opportunities, Intel CEO Paul Otellini said during a financial conference call on Tuesday.
Although the first Windows 8 ultrabooks and hybrid tablets will be based on the Ivy Brodge chips, laptops and desktops with Intel's next-generation Core processor, code-named Haswell, will be available in the first half of next year. The Haswell chip will succeed current Core processors code-named Ivy Bridge. Intel promises that Haswell will deliver twice the performance of Ivy Bridge, and in some cases will double the battery life of ultrabooks.
Intel will release two families of Haswell chipss: 10-watt chips or ultrabooks that double as tablets, and 15-watt and 17-watt chips designed for other ultrabooks and laptops.
Haswell will be "qualified for sale" in the first half of 2013, said Stacy Smith, chief financial officer at Intel, during the conference call.
Haswell will also pack a graphics processor capable of delivering 4K graphics. Ultrabooks with Haswell will also include wireless charging, NFC capabilities, voice interaction and more security features.