Intel’s Data Centre business flounders

flounder-6001Chipmaker Intel cut revenue growth forecast for its highly profitable business of making chips for data centres claiming that businesses are reducing spending due to weak macroeconomic growth.

Intel has been counting on the data centre business to help offset declining demand for its chips used in PCs and it bought  Altera for $16.7 billion to help out.

Intel now expects data centre business to grow in “low double digits” in 2015, compared with its earlier forecast of about 15 percent growth.

Data centres are Chipzilla’s second biggest area and grew 19.2 percent in the first quarter, 9.7 percent in the second and 12 percent in the latest quarter.

Chief Executive Brian Krzanich insisted that the company was not “rethinking the long-term growth” of the business.

The weak data centre forecast took the shine off from the company’s better than expected profit and revenue in the third quarter.

The company also trimmed its 2015 capital expenditure for the third time to $7.3 billion, plus or minus $500 million.

Intel had previously forecast capital expenditure of $7.7 billion, plus or minus $500 million.

The company said it expected fourth-quarter revenue of $14.8 billion, plus or minus $500 million. The midpoint of the range is a marginal increase from a year earlier. It’s into its pluses and minuses, that INTC

Intel said revenue from its PC business fell 7.5 percent to $8.51 billion in the third quarter ended September 26.

Intel’s net income fell to $3.11 billion from $3.32 billion last year.

Net revenue declined to $14.47 billion from $14.55 billion, but beat analysts’ estimate of $14.22 billion.