Going into Intel's third quarter earnings announcement on Tuesday after the bell, the chipmaker's prospects didn't look great.
Intel reported third quarter earnings of $3.0 billion, or 58 cents a share (statement). Non-GAAP earnings were 60 cents a share on a revenue of $13.5 billion.
Wall Street was expecting Intel to report third quarter earnings of 49 cents a share on revenue of $13.23 billion.
CEO Paul Otellini commented in prepared remarks:
Our third-quarter results reflected a continuing tough economic environment. The world of computing is in the midst of a period of breakthrough innovation and creativity. As we look to the fourth quarter, we're pleased with the continued progress in Ultrabooks and phones and excited about the range of Intel-based tablets coming to market.
Intel chief financial officer Stacy Smith reiterated Otellini's comments in a separate memo issued on Thursday:
Relative to the normal seasonal growth we see in the third quarter our business was negatively impacted by macroeconomic weakness leading to softness in both the consumer and enterprise market segments. In addition, we saw a reduction in inventories in the PC supply chain versus the normal increase in the third quarter.
As with the hard disk drive industry (among others), Intel is also likely expecting a fourth quarter boost from the release of Windows 8.
For the outlook, Intel is predicting a revenue of $13.6 billion, plus or minus $500 million, at the end of the fourth quarter with full-year capital spending expected to equal $11.3 billion, plus or minus $300 million.
Wall Street was expecting Intel to report fourth quarter sales of $13.74 billion. Capital spending will be nearly $1 billion lower than expectations.
By the numbers: