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Intel Gives A Disturbing Warning About The PC

One of the companies most dependent on the personal computer is Intel (INTC). Intel is the biggest semiconductor company in the world, and derives most of its business from chips used in personal computers. In fact, Intel's total revenue was $55.8 billion last year, of which $34.6 billion came from its PC business. That means Intel still derives 62% of its revenue from personal computers. This is significantly weighing on Intel's growth prospects, because the PC market is shrinking.

Technology research firm IDC found that global PC shipments fell 2.4% in the fourth quarter, year over year. Add to this Intel’s own warning on March 12. Intel warned that first-quarter sales would be slashed lower than previously guided, by nearly $1 billion. This is because small and medium businesses did not upgrade from the Windows XP operating system as much as Intel had expected. As a result, shares of Intel fell 4% on the day of the announcement, and after a 40% rally last year, there may be more downside in store.