Intel profits plummet as IBM revenues flat-line

By Sooraj Shah
17 Oct 2012 View Comments

Shares in technology giants Intel and IBM dropped as both companies showed weakness in their third quarter revenues.

Chip manufacturer Intel reported a quarterly revenue of $13.46bn (£8.32bn), down from $14.23bn (£8.8bn) in the same quarter last year, while its net profit of $3bn (£1.86bn) was down 14 per cent in comparison to Q3 in 2011.

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"Our third-quarter results reflected a continuing tough economic environment," said Intel president and CEO Paul Otellini.

"The world of computing is in the midst of a period of breakthrough innovation and creativity," he added.

Intel's Q3 earnings had been revised down on its revenue forecasts. The chip maker could come under increased pressure from ARM vendors from 26 October, when Microsoft is scheduled to launch Windows RT, the Windows 8 operating system for ARM devices such as tablets.

Intel's rival AMD is to announce its third quarter results tomorrow. It expects revenue to decrease by 10 per cent from Q2. In a statement, the firm said that the expected gross margin was "negatively impacted by weaker than expected demand".

Meanwhile, IBM reported its third-quarter profits at $3.8bn (£2.3bn), which was flat year-on-year.

Excluding UK pension-related charges, profits for the company rose three per cent year-on-year to $3.9bn (£2.4bn).

IBM suffered a total revenue decrease of five per cent to $24.7bn (£15.27bn) from the third quarter of 2011. Adjusting for currency negatively impacted the firm's revenue growth by about $1bn (£618m).

In a conference call to analysts, IBM CFO Mark Loughridge claimed that the company started off in its first two months of the quarter on a "stronger trajectory", but blamed software deals that had not been finalised as a reason for the third month affecting the overall quarter.

"It was really a fall-off that we saw in our global business services business, number one, and our software business, number two," he said.

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