Intel CEO Says Quarterly Forecast Remains ‘Right On,’ Even Amid PC Slump

Intel Corp. (INTC) Chief Executive Officer Paul Otellini said the company’s forecast for this quarter remains “right on,” as emerging economies and surging demand for data centers help make up for a personal-computer slowdown.

The popularity of smartphones and tablets is spurring the need for more servers, which run on Intel processors, Otellini said today in a presentation to analysts at the company’s Santa Clara, California, headquarters. Brazil, China and other developing countries also are fueling sales, he said.

Hewlett-Packard Co. (HPQ), the biggest computer maker, cut a billion dollars from its annual sales forecast today, deepening concerns that the PC industry is suffering from a slump. A windfall from tablets and smartphones is helping Intel maintain its growth, Otellini said. The company is making more money from the explosion of such products than anyone else, he said, even though Intel doesn’t produce chips directly for the devices.

The industry devotes one server to every 600 smartphones in use, and one to every 122 tablets, he said. That’s helping push Intel’s data-center sales to $10 billion this year, and they’ll double to $20 billion within five years, he predicted.

Otellini affirmed a second-quarter forecast that Intel made on April 19. Revenue will be $12.8 billion, plus or minus $500 million, the company said at the time.

“Our guidance for the quarter is still right on,” Otellini said today.

New Designs

Even so, Intel’s road map of future products is inadequate, he said. The company is reworking its designs to make chips that consume less power. Its Atom processor, aimed at getting the company into mobile phones, tablets and consumer electronics, will be produced using a more advanced manufacturing technology -- known as 14 nanometer -- within three years.

Global PC shipments unexpectedly fell 3.2 percent in the first quarter, IDC reported in April. The rise of tablet computers, along with the Japanese earthquake and unrest in the Middle East, affected sales.

Otellini is trying to lessen his company’s dependence on the PC market and have it profit more directly from demand for tablets and phones, a market where Intel’s chips have lost out to rival designs.

About 35 tablets based on Intel’s chips should come out this year, the bulk of them based on Google Inc. (GOOG)’s Android operating system. The company has also said that there will be at least one mobile phone on sale that uses its processors by the end of the year.

Intel shares fell 9 cents to $23.55 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares have climbed 12 percent this year.

To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles@bloomberg.net

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