Intel, IBM profits take lumps

• Intel's net income fell 14% from a year ago
• PC market in slowdown
• IBM revenue down 5% from year-ago quarter

SAN FRANCISCO -- The PC market's drubbing from waves of tablet buyers is taking a toll on Silicon Valley chipmaker Intel.

Intel on Tuesday reported that third-quarter net income fell 14% from a year ago. The chipmaker also gave Wall Street a disappointing revenue forecast for its current quarter.

Shares of Intel fell 3.6% to $21.54 in after-hours trading.

"The PC market is really slowing down at the moment," says Gartner analyst Mikako Kitagawa. "Tablets are still really in the early phase of their product lifecycle."

Shipments of personal computers, many of which run on Intel chips, declined 8.8% in the third quarter compared with a year ago, according to Gartner. Tablets shipments are up 119% in 2012, Gartner says.

Third-quarter net income was $2.97 billion, or 58 cents per share, down from $3.47 billion, or 65 cents per share, a year ago. Intel blames tough economic conditions, but analysts believe a shift in spending from PCs to tablets and smartphones may be contributing. Global shipments of personal computers in 2012 are predicted to decline for the first time in 11 years, according to a recent report from industry tracker IHS iSuppli.

Still, Intel beat expectations for the quarter. Analysts polled by FactSet expected profit of 50 cents per share. Revenue fell 5.5% to $13.5 billion. Analysts had expected $13.22 billion.

The Santa Clara, Calif., chipmaker says it expects about $13.6 billion in fourth-quarter revenue, below the analysts forecast of $13.7 billion.

Meawhile, IBM — which exited the personal computer business years ago — reported flat earnings and revenue that declined 5% from a year ago.

The services giant earned $3.8 billion, or $3.33 per share, in the July-September period. The company delivered the same net income a year ago, but its per-share earnings were 14 cents lower in the 2011 quarter because the company then had more outstanding stock.

If not for the costs of past acquisitions and retirement charges, IBM said it would have earned $3.62 per share. On that basis, IBM exceeded expectations.

Revenue for the quarter was $24.7 billion compared with $26.2 billion a year earlier. Analysts, on average, had projected revenue of $25.7 billion.

IBM shares fell 3.4% to $203.80 in after-hours trading.

Contributing: The Associated Press