Intel cutting spending 'near term' as chip giant sees PC weakness for the rest of the year
Justin Sullivan

Intel (NASDAQ:INTC) Chief Executive Pat Gelsinger said the chip giant would lower and focus its spending and expenses for the remainder of the year, citing ongoing economic weakness and a 10% decline in the PC market.
Speaking on the second-quarter earnings call, Gelsinger said Intel (INTC) has a "critical foundation for process execution" but the weak second quarter and guidance for the rest of the year have caused the company to adjust its plans. 
The 61-year-old Gelsinger added that gross margins would go back to the target range by the fourth quarter.
Regarding the PC market, Gelsinger said that there is weakness in the consumer end, but strength in the enterprise and high-end PCs. He added that some of Intel's (INTC) largest customers were reducing inventories "at a rate not seen in the last decade."
Intel (INTC) announced MediaTek as a foundry customer earlier this week, but Gelsinger added that it is speaking with six of the top 10 chip design companies to become a customer for the nascent business.
Intel (INTC) shares fell more than 7% in extended-hours trading. 
Chief Financial Officer David Zinsner said the company would slow hiring and added that the company is working to optimize operating cash flow. He added that Intel (INTC) is lowering its capital expenditures outlook for the rest of the year to $23B, down $4B from a prior outlook.
Looking to the third quarter, Intel (INTC) said it sees revenues between $15B and $16B, well below the $18.67B analysts were expecting. Non-GAAP gross margins are expected to be 46.5%, with earnings per share of $0.35.
Santa Clara, California-based Intel (INTC) also lowered its full-year outlook for sales to be between $65B and $68B, compared to a previous outlook of $76B. Analysts were expecting $74.76B for full-year revenue.
Full-year earnings are expected to be $2.30 per share, far below the $3.39 per share analysts were expecting.
In the second quarter, Intel (INTC) said it earned an adjusted $0.29 per share on $15.3B in revenue, down 17% year-over-year. Data Center revenue fell 16% year-over-year, while the company's largest segment, Client Computing, accounted for $7.7B in sales, down 25% year-over-year.
Last week, investment firm Deutsche Bank said it expected a "weak" report and guidance from Intel (INTC), citing weakening data points around the PC and the broader global economy.