Intel Profit Drops 25 due to Fall in Chip Sales

Intel, which is the world’s biggest computer chip manufacturer, reported a drop in its quarterly profits Tuesday that reflected the consensus within the personal computer industry. The big chip maker faces several challenges as it struggles to make the shift from its traditional business of providing chips that power personal computers. Intel

Consumers have switched to tablets and smartphones for their computing and this led to the drop in personal computer sales. Intel reported net income of $2.05 billion, which is a decline of 25 percent from $2.74 billion in the same period last year.

Intel’s earnings dropped to 40 cents per share, compared with 53 cents per share the previous year. The first quarter performance was below Wall Street’s average estimate of 41 cents per share. Revenue in the first quarter fell to $12.58 billion from $12.91 billion in the same quarter of 2012. It was in line with the predictions made by analysts of $12.6 billion.

Intel shares were flat in after-hours trading. The company’s shares went up 54 cents per share to close at $21.92 in regular trading session. Intel executives were more optimistic about the results for the rest of the year.

Stacy J. Smith, Intel’s chief financial officer, said that the company should return to growth in the second half of the year. It could get double digit revenue growth to end the year. New products such as the Haswell chips, which is a power saving processor that supports touch screen computing on ultrabook computers, as well as an improving economy could help the company with its goal. Smith said that Haswell chips will be in products that are scheduled to be shipped in the quarter.

Intel’s business of selling high-end chips to power servers in data centers is also growing. Its data center group got a 7 percent increase in revenue on the quarter to $2.6 billion.