NEW YORK (Reuters) - Chipmaker Intel Corp forecast current-quarter revenue and gross margins that disappointed investors, sending its shares down more than 2 per cent in extended trading.
Revenue from its mainstay PC business fell about 3 per cent to US$8.9 billion in the fourth quarter from the third, raising doubts about the expected recovery of the personal computer business.
Global personal computer shipments fell 2.4 per cent in the fourth quarter of 2014, according to research firm IDC, capping three years of declines.
That was not as bad as expected, raising hopes among some investors that the PC market is starting to stabilize.
That optimism has helped drive Intel's stock up 16 per cent in the past three months, compared with a 7 per cent gain for the S&P 500, to levels not seen since 2001.
In the light of that, Wall Street was hoping for more encouraging figures.
"The top line looked a little bit light of the Street and gross margin looked a little bit light," Christopher Rolland, an analyst at FBR Capital Markets, said. "PC was weaker in the fourth quarter than we were expecting," Rolland added.
The chipmaker forecast first-quarter revenue of US$13.76 billion, plus or minus US$500 million, and gross margins of about 60 per cent, far below the 65.4 per cent it reported in the fourth quarter.
Analysts on average were expecting revenue of $13.77 billion, according to Thomson Reuters I/B/E/S.
Despite exceeding the goal of seeing its chips used in 40 million tablets this year, the heavy subsidies that Intel offered added to its operating loss in its mobile business.
Net income for the fourth quarter rose to US$3.66 billion, or 74 cents per share, for the quarter ended Dec. 27, from US$2.6 billion, or 51 cents per share, a year earlier. Revenue rose to US$14.7 billion from US$13.8 billion.
Analysts on average had expected a profit of 66 cents per share on revenue of US$14.71 billion, according to Thomson Reuters I/B/E/S.
Intel shares were down 2.8 per cent in after-hours trading at US$35.16, after closing on Nasdaq at US$36.19.