Intel's outlook falls short of expectations

 - Intel forecast gross margins for the current quarter below expectations in a PC industry fighting a weak global economy and a shift by consumers toward tablets and smartphones.

Intel's third-quarter report on Tuesday followed a warning by the top chipmaker in September that demand was weaker than expected and that revenue would fall far short of its forecast.

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 fourth-quarter gross margins would be 57 percent, or 58 percent non-GAAP, both plus or minus a couple of percentage points.

Wall Street had expected Intel to deliver gross margins of closer to 62 percent on average in the holiday quarter. Some warn that the chipmaker may find it tough to shore up its profitability as tablet computers continue to lure buyers away.

In the third quarter, Intel's revenue was $13.5 billion, flat compared with the year-ago period. Analysts had expected $13.23 billion in revenue for the third quarter, according to Thomson Reuters I/B/E/S.

The world's largest chipmaker estimated fourth-quarter revenue of $13.6 billion, plus or minus $500 million. Analysts expected $13.74 billion for the current quarter.

Net earnings were $3 billion, or 58 cents a share, compared with $2.8 billion, or 54 cents a share in the same quarter last year.

Shares of Intel fell 0.89 percent in late trade after closing up 2.85 percent at $22.35.