Intel warns slowing economy will dent next quarter income

Intel logo Intel makes chips for 80% of the world's personal computers but has made less impact in the tablet computer market

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The world's largest maker of computer chips, Intel, says the weak economy will mean its next profits will miss forecasts.

The company's second-quarter net income was $2.83bn (£1.8bn, 2.3bn euros), 4.3% below that made in the second quarter of last year.

Operating expenses rose faster than its revenue, which rose 3.6% to $13.5bn.

Intel has also been buying back shares, an activity that helped keep earnings per share flat.

The company said it expects to make revenue of $13.8-$14.8bn in the third quarter with a mid-point of $14.3bn, below current analyst forecasts of $14.6bn.

Intel cut its revenue growth forecast for the whole of this year to between 3-5%, down from a previous forecast of "high single-digit growth".

The company makes chips for 80% of the world's personal computers (PCs) but has a far smaller presence in tablet computers like Apple's iPad, or in the fast-growing smartphone sector.

Tablet computer sales are rising far more quickly than those of PCs.

Intel's chief executive, Paul Otellini said in a statement: "As we enter the third quarter, our growth will be slower than we anticipated due to a more challenging macroeconomic environment."

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