Intel outlook fails to inspire PC hope

Intel, along with rival Advanced Micro Devices, had previously warned of weak demand for PCs, hit by a troubled global economy and the growing popularity of tablets like Apple Inc's iPad, once dismissed as a niche device but now leading a fundamental shift in consumer computing.

Intel's corporate-focused server and data center business has helped offset weak PC sales in recent quarters, but in the third quarter, revenue from that division also disappointed as enterprises bought fewer servers.

You have to remember, data center has been the rock we've all leaned on, said Patrick Wang, an analyst at Evercore Partners. It's a reflection of enterprises and companies rationalizing their year-end spend.

With economic growth slowing in China and struggling in Europe and the United States, global PC shipments are expected by analysts to decline slightly this year, the first annual drop since 2001.

Intel said the data center business, which sells server chips and other equipment to companies and governments, grew 6 percent year over year in the third quarter, although it was down 5 per cent from the prior quarter.

Profitability will also take a hit, as Intel idles excess capacity at its plants in an effort to reduce inventories of its processors.

It foresees fourth-quarter gross margins of 57 per cent, or 58 per cent on a non-GAAP basis, both plus or minus a

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