Intel says worst is over for hard-hit personal computer industry

Chipmaker raises revenue forecast for third quarter on expectations of demand rebound

Intel Corp believes the worst is over for a personal computer industry hammered by the mobile revolution.

The United States-based chipmaker forecast third-quarter revenue above Wall Street’s expectations on Tuesday, sending its stock 4 per cent higher in extended trade.

Investors have pushed shares of PC mainstays Microsoft and Intel to decade-highs, partly on bets that the global slump in PC demand that began with Apple’s launch of the iPad four years ago is hitting bottom.

“PCs have stabilised,” chief financial officer Stacy Smith after Intel’s report. He said he expects shrinking demand from consumers in China and other developing countries to rebound, just as it recently has in the United States.

IDC said that from the end of 2010 – the year the iPad was launched – to the end of 2013, annual global PC shipments shrank 12 per cent.

Intel now expects the market’s recovery to help it grow its full-year revenue about 5 per cent, slightly higher than prior expectations. Chief executive Brian Krzanich told analysts that improved demand from companies replacing old PCs would last at least until the end of 2014.

Intel increased its share buyback programme by US$20 billion. It plans to repurchase about US$4 billion of stock in the current quarter, underscoring its confidence in a turnaround and a growing crop of “two in one” devices with detachable keyboards and screens.

“My presumption would be that if they’re confident enough to boost it that they see this (PC market) upside maintaining,” Bernstein analyst Stacy Rasgon said.

Intel said it expects third-quarter revenue of US$14.4 billion, plus or minus US$500 million. Analysts had expected US$14 billion on average.

Revenue from Intel’s PC group rose 6 per cent in the quarter while its data centre group, a big contributor to gross margins, had revenue jump 19 per cent. But the mobile and communications group’s revenue fell 83 per cent to US$51 million.