(RTTNews) - Chip maker Intel Corp. (INTC), Tuesday reported a slight decline in third-quarter profit, hurt by mainly by weak margins and almost flat revenue amid tough business conditions. Nonetheless, both earning and revenues for the quarter topped Wall Street estimates.
Moving into the fourth quarter, Intel provided a weak revenue outlook as demand for PCs that uses its chips are far outweighed by consumer preference for tablets, smartphones and other devices. The guidance reflects caution, as order patterns of customers and their desire to keep inventory levels continue to remain lean, the company said in a statement.
Nonetheless, Intel is pushing ahead with its plan to offer a diverse product portfolio that spans key growth segments. Intel is the world's largest supplier of microprocessors, the brains of personal computers, with roughly 80 percent of the global market share.
The company has been facing revenue pressures owing to a slump in the PC market. Earlier this month, market intelligence services provider International Data Corp. said global PC shipments in the third quarter of 2013 declined 7.6 percent from last year to 81.61 million units.
Intel reported third quarter net income of $2.95 billion, compared with $2.97 billion last year. On a per share basis, earnings were $0.58, flat with last year.
On average, 40 analysts polled by Thomson Reuters estimated earnings of $0.53 per share for the quarter. Analysts' estimates typically exclude special items.
"The third quarter came in as expected, with modest growth in a tough environment," said Intel CEO Brian Krzanich.
Revenue for the third quarter increased to $13.48 billion from $13.46 billion a year ago. Thirty-nine analysts had a consensus revenue estimate of $13.47 billion for the quarter.
PC client group revenue for the quarter fell 3.5 percent year-over-year to $8.4 billion. The group caters to desktops, notebooks, and wireless connectivity products.
Data center group revenue for the quarter climbed 12 percent to $2.9 billion. The group caters to the server and storage markets.
Other Intel Architecture Group revenue for the quarter slid 9.3 percent to $1.1 billion.
Operating expenses for the quarter escalated to $4.91 billion from $4.67 billion in the prior year, mainly on higher research costs. Gross margin for the quarter was 62.4 percent, down from 63.3 percent a year ago.
For the fourth quarter, Intel expects revenue of $13.7 billion, plus or minus $500 million. Analysts currently expect revenue of $14.02 billion for the quarter. The company expects gross margin of 61 percent, plus or minus a couple of percentage points.
Intel also trimmed its 2013 capital expenditure target to $10.8 billion, plus or minus $300 million, from $11 billion, plus or minus $500 million.
Intel stock closed Tuesday at $23.39, down $0.06 or 0.26%, on a volume of 42.6 million shares on the Nasdaq. In after hours, the stock dropped $0.57 or 2.44%, to trade at $22.82. In the past year, the shares trended in a range of $19.23 - $25.98.