Slow Windows 8 Sales Hurt Intel

Business Insider

Intel accidentally dropped its quarterly earnings report a few minutes before the stock market closed today.

Fortunately, it was a solid-enough quarter, beating some expectations and missing on others. Intel is trading up about 2% after hours.

Intel reported $0.48 in earnings per share versus expectations of $0.45, thanks to higher gross margins and lower taxes than it expected.

But Intel is paying the price for a sluggish PC market, which wasn't helped by Microsoft's launch of Windows 8.

Microsoft says it's sold some 60 million Windows 8 licenses so far. While that's on pace with the earlier rollout of Windows 7, we don't know how many of those licenses were upgrades on existing machines, which don't benefit Intel, and how many went on new machines with Intel chips inside.

Intel's results suggest that new PC sales were weak. That matches a report from Gartner, the tech research firm, that PC sales dropped 4.9% in the fourth quarter.

PC makers like Acer, Asus and Fujitsu say that so far, demand for new Windows 8 PCs so far has been "weak," as we previously reported.

Microsoft's radically new Windows 8 interface design accounts for some of that weak demand. But consumers are also more interested in buying tablets and smartphones instead of PCs. Apple's iPhones and iPads and Google's Android smartphones and tablets run on processors based on designs from Intel rival ARM. And even Microsoft is selling an ARM-based tablet, the Surface RT.

So, Intel's PC Client Group revenues were $8.5 billion, down 1.5% from the previous quarter and down 6% from the year-ago quarter.

Revenue classified as "Other Intel Architecture" was $1 billion, down 14% over last quarter and down 7% from a year ago. That unit includes several mobile-related business units.

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