October 17, 2012, 11:03 AM — With Intel reporting a year-over-year drop in revenue and profit for its third quarter, industry analysts say the company isn't in trouble but it needs to ward it off -- and now.
Late on Tuesday, Intel execs blamed a tough global economy and the rise of the tablet for a tough Q3 report. The company reported that profit for the quarter ending Sept. 29 came in at $2.97 billion, compared to $3.47 billion in the same quarter in 2011.
The company's revenue, coming in just above analyst expectations, hit $13.5 billion for the third quarter. That too was down from the same period last year, which saw revenue of $14.2 billion.
Looking ahead to the company's fourth quarter, Intel CEO Paul Otellini said during a teleconference that he expects to see half of their normal seasonal growth.
"During the last month, I've met with all of our major customers," he added. "While the market remains tough, I am encouraged to see great innovation... I'm excited about new products and the capabilities they bring to consumers and to the enterprise."
Intel is looking at slowing PC growth, noted Dan Olds, an analyst with The Gabriel Consulting Group. However that's not surprising considering the sluggish worldwide economy and a PC market being battered by buyers' growing infatuation with smartphones and tablets like Apple's iPad.
"Businesses are keeping laptops longer," said Olds. "The refresh cycle with companies is being lengthened and you don't see consumers turning over their stuff as often... [Tablets] are new and sexy so people will buy them. They will buy another PC, but just not yet."
Patrick Moorhead, an analyst with Moor Insights & Strategy, said Intel isn't in any trouble right now but the possibility of trouble looms ahead.
"The challenges for Intel are in the future and revolve around demand returning for the PC and enterprise server market," he said. "The PC market is grim at this point, but the industry is entering a phase where there is a ton of PC innovation. It really is too early to judge what happened in the last two quarters and transpose it on to the next two quarters."