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Chip giant Intel stands by sales, margin forecasts despite a drastic downturn in PC sales

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NEW YORK – Intel Corp., the world’s largest maker of chips for PCs, is remaining steadfast amid a drastic slowdown in computer sales.

Intel on Tuesday said it’s keeping its sales and margin forecasts for this year, even as first-quarter PC sales plunged 14 percent from a year ago, as measured by research firm IDC. The company is helped by rising shipments of chips for servers.

The Santa Clara, Calif., chipmaker also met analyst forecasts for the just-ended quarter. It earned $2 billion, or 40 cents per share, in the January to March period. That was down 27 percent from $2.74 billion, or 53 cents per share, a year ago.

Revenue was $12.6 billion, slightly below the midpoint of Intel’s own forecast range. The figure was down 2.3 percent from $12.9 billion a year ago.

Intel shares were flat in extended trading, after the release of the report, after rising 55 cents, or 2.6 percent, to $21.93 in regular trading.

Intel said it shipped 7 percent fewer PC chips compared to a year ago, but 6 percent more server chips.

The semiconductor giant also left its full-year forecast for gross margins unchanged – suggesting a level of optimism for PC sales to recover some ground following a relatively dismal first quarter. Intel also cut its full-year capital spending plan by $1 billion from its prior forecast.

“They are setting up for better results going forward,” Doug Freedman of RBC Capital told MarketWatch. “What you’re seeing is Intel’s ability to right-size its factories pretty quickly.”

The company also made no announcements regarding a new CEO. Current chief Paul Otellini is retiring, with his last day set for the company’s annual shareholder meeting on May 16.

One of the company’s largest chipmaking plants is in Rio Rancho, where it employs more than 3,000 people.

Bloomberg contributed to this report.

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