NEW YORK (AP) -- Shares of chip maker Intel Corp. fell Monday on worries about weaker-than-expected personal computer demand.
THE SPARK: Citi analyst Glen Yeung said sales of the personal computers that Intel supplies remain weak. He backed his "Neutral" rating for the stock, but cut his 2013 and 2014 profit predictions by 2 cents per share each.
THE BIG PICTURE: Demand for traditional desktop and laptop computers has dropped in recent years as a result of the consumer shift toward tablets and smartphones.
That's sent the sales and profits of the chip companies that supply computer makers tumbling.
THE ANALYSIS: Yeung said sales of notebook computers have been lower than expected, while overall demand from China has been weak. Meanwhile, it appears that Intel's second-quarter demand from its suppliers was flat or slightly down from last year.
Yeung said that while the stock's dividend yield and optimism about the company's opportunities in tablets and phones will keep the shares from falling much, it's hard to believe they will be able to post much in the way of gains.
The analyst said he now expects Intel to post 2013 and 2014 per-share profits of $1.80 and $1.74, respectively. Analysts, on average, expect a 2013 profit of $1.86 per share and a 2014 profit of $2.02 per share, according to FactSet.
Yeung also removed Qualcomm Inc. from his firm's top picks list, pointing to lackluster smartphone sales, and said Micron Technology Inc. remains his sector favorite.
THE SHARES: In afternoon trading, Intel shares fell 92 cents, or 3.8 percent, to $23.14 after dropping as low as $23.10 earlier in the session. Over the past 52 weeks, the company's shares have traded between $19.23 and $26.90.
Since the beginning of this year, Intel shares have risen about 17 percent.