Intel Corporation (NASDAQ:INTC) Lowers Revenue Outlook On Declining PC Demand

Intel Corporation (NASDAQ:INTC) said that $ 1 billion revenue decline can be attributed to Windows XP’s stubborn grip. The small and mid-size businesses are still not ready to replace the 13-year-old software. The business clients are not willing to upgrade from Windows XP. It is a popular but 13-year-old operating system.

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The expectations

Intel said that it expects to report $12.8 billion in 1Q sales, down from the previous forecast of $13.7 billion. The disappointment overshadows forecast is below Wall Street expectations. The management said that it occasionally happens and as a company they are transparent about expected changes related to the financial performance. The outlook has changed, but the strategy, and emphasis on executing it remains the same.

Poor demand

Intel Corporation (NASDAQ:INTC), whose chips are used in most laptops and desktops worldwide, stated that lighter PC sales resulted from weaker-than-expected demand to upgrade operating systems in small and mid-size business segments. Also, the other economic issues like a weaker euro affected demand. Microsoft Corporation (NASDAQ:MSFT) ended technical support services for Windows XP in 2014, which led many consumers and businesses to upgrade to newer machines. The global share of Windows XP in the tablet and desktop operating system declined 11% in February from 17% a year ago. Windows 7 accounts for almost 50% of the market.

The concerns

If the customers do not get inclined to move from Windows XP, it can create demand problems for Intel as well as Microsoft. The PC maker is promoting its latest operating system, Windows 10, set to be launched later in the year. For businesses and consumers alike, a lack of interest in replacing operating system would make them vulnerable to greater security risks.

Data center

The only positive aspect in the announcement was outlook for data centers. Intel stated that its data center unit has turned out to be a major profit engine for the company. It is meeting revenue expectations and posting substantial growth.

Culver Stinson

Culver Stinson

Stinson is US Markets Daily’s Senior Producer for News & Public Affairs.