Intel ramps up mobile chip plans following disappointing quarter

Chip maker bets on Atom processors to make in-roads into mobile market

Intel (NASDAQ: INTC) is reemphasizing its plans to go after the mobile chip market following second quarter results that failed to meet Wall Street's expectations.

The chip maker, which has dominated the PC processor market for so long, has been trying to crack the mobile chip market for a number of years. It even tried unsuccessfully to win smartphone manufacturers over with an "Intel Inside" branding campaign that proved so successful for the PC market.

In the second quarter, Intel posted $12.8 billion in revenue, up 2 percent from the same time last year, and net income of $2 billion, with an earnings per share of 39 cents. Analysts were expecting Intel to report an earnings per share of 40 cents, and quarterly revenue of $12.9 billion.

The chip maker said it was forecasting revenue of $13.5 billion, plus or minus $500 million, for the third quarter, while analysts had predicted revenue of $13.7 billion for the current quarter. The company also downgraded its full-year forecast, citing a weaker than expected PC market, and cut its 2013 capital spending program by another billion dollars to $11 billion.

"Intel Atom and Core processors and increased SOC [system-on-a-chip] integration will be Intel's future. We will leave no computing opportunity untapped. To embrace these opportunities, I've made it Intel's highest priority to create the best products for the fast growing ultra-mobile market segment," said Intel's new CEO Brian Krzanich in statement announcing the results.

The Atom processor is Intel's attempt to make in-roads into the mobile device chip market, a market currently dominated by the likes of Qualcomm (NASDAQ: QCOM). According to the latest stats from Strategy Analytics, Qualcomm controls close to half of the smartphone app processor market, with Intel failing to make the top five.

"With its new, low-end Atom processor, Bay Trail, the company is gaining traction in cheap notebooks and tablets, but we believe this is at the expense of higher-end core processors," Piper Jaffray analyst Gus Richard was quoted by CNET as saying.

"Intel is late to the smartphone market and we believe high-end smartphone sales are starting to roll over. Intel is far behind its competitors in terms of cost and integration in smartphones, in our view. We do expect Windows 8.1 to drive a corporate upgrade cycle next year, creating a bounce in PC demand," Richard added.

For more:
- check out Intel's release
- see the Strategy Analytics stats
- read the CNET article

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