Intel revenues fall five per cent on desktop PC decline

New CEO Brian Krzanich promises to 'fight on the desktop, in the data centre, and the ultra-mobile market segment'

The slowdown in the PC market decisively caught up with Intel today following second quarter results in which revenues fell by 5.1 per cent compared to the same quarter in 2012.

The company posted revenues of $12.8bn in the second quarter compared to $13.5bn in 2012. Operating income weighed in at $2.7bn, while net income fell by 29 per cent to $2bn. However, cash flow remained solidly positive, generating approximately $4.7bn in cash from operations enabling it to pay a healthy dividend of $1.1bn.

New CEO Brian Krzanich promised that the company would continue competing on all fronts, including its efforts to drive into mobile computing where it barely has a presence.

"Looking ahead, the market will continue buying a wide range of computing products," said Krzanich.

He added: "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."

But the hardest hit of Intel's three main operating divisions in terms of revenue decline was not the PC Client Group, which accounts for two-thirds of revenues. It posed turnover of $81.bn, which was down 7.5 per cent, year on year.

Instead, the Other Intel Architecture Group, which makes embedded components and parts for smartphones and netbooks, filed revenues down by 15 per cent to $942m, while the Data Center Group posted flat revenues of $2.7bn.

The Software and Services Group, meanwhile, which is primarily composed of McAfee security and Wind River embedded software, posted revenues up by four per cent to $610m.

Over its financial year, though, Intel's current guidance is that revenues will essentially be flat "down from prior expectations of [a] low single digit percentage increase".

It was in the PC group that the revenue decline was most revealing, however, with a unit volume decline of five per cent compounded by average selling prices that had were down by three per cent, compared to the first quarter - in other words, Intel's average selling prices have been squeezed this year.

Intel, though, is weathering the changing market better than its main rival Advanced Micro Devices (AMD). It reports its earnings on Thursday and is expected to report a loss, with revenues down by about one-fifth to just $1.1bn.