Intel Q2 profits down, but in line with expectations

Chip maker Intel has reported a second quarter profit of $2bn, down 29% from a year ago, roughly in line with average analysts’ estimates.

Revenues were also down to $12.8bn, slipping 5% on last year’s second quarter figure and just missing analysts’ forecasts of $12.9bn.

This is the fourth consecutive quarter of declining sales for the company, with sales suffering as the market has switched from traditional PCs to other form factors using chipsets from competitors.

According to Gartner Research, global PC shipments fell 10.9% to 76 million in the second quarter.
In the first quarter of 2013, sales of PCs in the UK dropped 16% to 2.5 million units, with a slower decline in the professional market cushioning the overall fall.

Consumer and business PC demand declined by 23.5% and 7.6% respectively, Gartner found.
Despite positive initial forecasts for the year, Intel has now reduced its expectations and plans to focus on selling chips for use in tablets and smartphones in a bid to regain lost ground.

Intel's new chief executive Bryan Kraznich told investors that it plans to flood the tablet market with inexpensive devices, and that building "ultramobile" chips is now the company's highest priority.
Kraznich, who took over from predecessor Paul Otellini in May, admitted that Intel had been “slow to respond” to the ultramobile PC trend.

As part of that strategy, Intel will focus on its Atom line-up of mobile processors, but the company said PCs will continue to be core to the company's business.

Intel said its current quarter sales will be $13bn to $14bn, in line with analysts’ expectations of $13.72bn.

For the full year, Intel said it expects its revenue to remain flat, down from an earlier forecast of a low single-digit percentage increase.

IBM misses revenue expectations again

IBM has reported second quarter revenues of $24.9bn, missing market estimates of $25.39bn but earning per share of $3.91, which is 14 cents better than analysts forecast.

Profit was also down at $3.23bn, a drop of 17% compared with the same period in 2012.

Last quarter, IBM's revenues and profit fell short of analysts' forecasts for the first time in eight years.
IBM raised its full-year earnings per share by 20 cents to at least $16.90. This excludes the $1bn in charges for its "workforce rebalancing", which includes layoffs.

In the first half of the year, software revenue was up 4%; services revenue down 4%; systems and technology revenue down 12%; business analytics revenue up 11%; and cloud revenue was up 70%.
As a result of the poor first quarter, the company cut jobs and focused on data analysis and cloud computing in an effort to stabilise its business.

More than 3,300 jobs were lost. IBM expects the savings in wages to start taking effect in the third quarter.
Although many technology companies have been hit by the global decline in PC sales, IBM insulated itself from the trend by selling its PC division to Lenovo for $1.75bn in 2005.

IBM says profit, revenue fell but raises expectations for year

A rebound for IBM failed to materialize in the second quarter, as profit and sales declined along with a slump in revenue from hardware and services.

However, in its quarterly financial report Thursday, the company raised its forecast for earnings per share, excluding restructuring charges, for the year.

Kathleen KeoughIBM's Q2 2013 results included losses in revenue and profit (click to enlarge). Second-quarter net income declined 17 percent from the year-earlier period to $3.2 billion, while revenue declined by 3 percent to $24.9 billion. Adjusting for currency fluctuations, revenue was down 1 percent.
Revenue was under the forecast of $25.37 billion from analysts polled by Thomson Reuters. However, operating earnings per share, excluding restructuring charges, was $3.91, above the analyst forecast of $3.77.

IBM raised its full-year earnings forecast to $16.90 a share, up from $16.70 previously. The numbers exclude restructuring and other charges.

The decline in both profit and revenue was worse than last quarter, when IBM reported a 5 percent decline in revenue to $23.4 billion and a 1 percent drop on net income to $3 billion.

But traders, apparently pleased by IBM earnings-per-share numbers, boosted company shares in after-hours trading to $194.55, up by $0.70 from the day’s closing number.

IBM is generally considered a bellwether for the tech industry due to its global reach and broad portfolio of software, hardware and services. What’s more, in a sign of the company’s importance as an indicator for markets in general, it is the most heavily weighted stock on the Dow Jones Industrial Average index.
Though services and overall hardware sales dropped during the second quarter, company officials stressed strength in software and big systems.

“In the second quarter, we delivered strong performance in our higher-value software and mainframe businesses,” said Ginni Rometty, IBM chairman, president and chief executive officer. Rometty said she expects improvement in the last half of the year, partly as a result of restructuring efforts that include acquisitions, sales of nonstrategic businesses and “skills rebalancing.”

Software sales totaled $6.4 billion, an increase of 4 percent year over year. Middleware, including WebSphere, information management, Tivoli and Social Workforce Solutions (formerly Lotus), generated $4.3 billion in revenue, up 9 percent.

The company’s key Global Technology Services segment, however, suffered a 5 percent decline in revenue to $9.5 billion.

Revenue for the Systems and Technology unit, which includes hardware products, was $3.8 billion, down 12 percent.

Revenue for major geographic segments of the company’s business were flat or in decline during the quarter. Revenue for the Americas was $10.7 billion, a decrease of 3 percent; revenue from the Europe/Middle East/Africa area was flat at $7.8 billion; and Asia-Pacific revenue decreased 8 percent to $5.8 billion.