Uh-Oh, Intel Can’t Keep Up

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Intel (NASDAQ:INTC) has lowered its forecast for fourth-quarter margins as it feels the effects of the PC market slump. Intel’s latest estimate shows a gross margin of about 57 percent, shy of the average analyst estimate of 61.4 percent. The company is projecting earnings between $13.1 billion and $14.1 billion; analysts had projected roughly $13.7 billion in revenues.

Intel’s poor performance in the recent quarter, on which it reported Tuesday, and on the present quarter, can largely be blamed on the PC market, which has been underperforming due in part to a soft economy. However, the recent slowdown may also be related to Microsoft’s (NASDAQ:MSFT) Windows 8 software — some consumers may be holding off purchasing a new computer until the new operating system becomes available.

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Of course, another culprit may be the increasing popularity of mobile devices, such as smartphones and tablets. Devices running Apple’s (NASDAQ:AAPL) iOS and Google’s (NASDAQ:GOOG) Android operating system are increasingly responsible for Internet traffic, which implies that people are spending more time on their mobile devices and less on traditional computers. Unfortunately for Intel, these mobile devices typically run on ARM (NASDAQ:ARMH) chipsets, not Intel (NASDAQ:INTC) chips. Intel has been trying to break into this segment, but has so far had little success.

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