Intel Corporation (NASDAQ:INTC) slashed its revenue growth outlook for its profitable division of manufacturing chips for data centers amid reduced spending from corporate customers because of slow macroeconomic growth.
The chipmaker giant has been relying on the data center business to make up for the decreasing demand for its processors incorporated in PCs, its largest revenue generator.
In June, the company decided to buy Altera Corporation (NASDAQ:ALTR) in a transaction valued at $16.7 billion to strengthen its portfolio of higher-margin chips intended for data centers.
Intel on Tuesday gave weak forecast for the data center business growth. The company said it is anticipating the segment to grow in low double digits this year, versus its previous growth outlook of roughly 15 percent. The business is the Intel’s second biggest, and had grown 19.2 percent in Q1, 9.7 percent in Q2, while 12 percent in the previous quarter.
The company also announced its third quarter earnings and revenue that beat consensus forecast, but weak data center guidance took the shine away from the better-than-expected results.
The world’s biggest chipmaker also reduced its capital expenditure to $7.3 billion for 2015, plus or minus $500 million.
INTC said sales from its PC business plummeted 7.5 percent to $8.51 billion in the latest quarter. Separately, research firm Gartner said global PC shipments dropped 7.7 percent in the third quarter.
The company posted earnings of $3.11 billion, or 64 cents a share for the quarter ended Sept. 26, versus $3.32 billion, or 66 cents a share in the same period last year. Analysts were looking for earnings of 59 cents a share.
Revenue for the quarter came in at $14.47 billion, below $14.55 billion last year, though surpassed consensus forecast of $14.22 billion.
