SANTA CLARA, CA – Analysts are expecting chipmaker Intel (NASDAQ:INTC) INTC +6.38% , who will announce their third-quarter earnings report after the closing bell on Tuesday, to report another down quarter. On Friday, research analyst Deepon Nag at Macquarie Equities Research downgraded Intel stock to neutral from outperform, citing ‘pressure in the core PC market.’
Overall the personal computer market has been hurt by the shift towards smartphones and tablets and as well as the sluggish adoption of Microsoft’s (NASDAQ:MSFT) MSFT +0.58% Windows 8 operating system. This downward trend in personal computers has had a significant impact on Intel as the company has long been the top producer of PC chips.
Another trend that is hurting Intel is the move towards cloud computing. As cloud, computing allows PCs to get by with less processing power than before. This will put pressure on the average selling prices of Intel’s PC chips as the company will most likely sell few of their high-end processors. While Intel does sell chips used in cloud data centers, it is unclear whether the cloud server market can match the volume of the PC market.
Macquarie is not the only group with a bearish outlook for Intel, and earlier this week Canaccord Genuity analyst Bobby Burleson lowered his estimates for Intel’s sales and earnings in 2013 and 2014. He reiterated a hold rating on Intel stock.
According to a Thompson Reuters poll, analysts expect Intel to post results of $ .53 per share on sales of $ 13.47 billion for the third quarter. When compared to the same period last year, that would translate to a 9 percent drop in earnings per share on flat sales. This would also be the fourth straight quarter where sales have been flat or down and the sixth straight quarter where EPS has done the same.
It is clear that analysts do not expect the trend to change as Intel struggles to define their role in the post-PC marketplace. Shares of Intel INTC +6.38% ended the week at $ 23.25.