Following market close on April 14, chipmaker Intel (INTC -1.79%) announced its first quarter results and revised its full-year financial outlook. The company hit the midpoint of the revised guidance that it gave in March, and the company said that for the full year, revenue would be approximately flat to 2014 levels.

Intel also revised down its gross profit margin forecast to 61% (give or take "a couple points") for the year from 62%. Intel says that lower factory utilization is leading to "higher platform costs," but that this is being "partially offset" by increased average selling prices and "lower factory start-up costs on 14nm."

The company also revised down both its full year operating expense forecast from $20 billion to $19.7 billion (give or take $400 million) as well as its capital expenditure plans for the year.

Digging into the revenue reduction
The big driver for the revenue reduction relative to the company's prior forecast is a worse-than-expected PC market. The company now expects a "mid-single-digit decline in the overall full year PC [total addressable market]," which is about in-line with the 4.9% drop that research firm IDC expects.

Intel seems to have maintained the guidance that it gave for its other businesses at the investor meeting last November. Although the PC market is still Intel's largest revenue segment, it's a testament to the health of the other businesses that Intel can maintain roughly flat revenue even with PC-related revenues set to decline so much.

As far as Intel's PC chip shipments go, Intel CFO Stacy Smith indicated that Intel's PC OEM customers will reduce inventory levels leading up to the Windows 10 launch. He then expects that Intel's customers will build inventories back up to normal levels once Windows 10 is out.

Margins down due to lower utilization
During the call, Smith said that the company's full-year gross profit margin is expected to come down due to a temporary reduction in factory utilization as well as lower chip shipments. Smith indicated on the call that by bringing utilization down on its prior generation 22-nanometer technology, the company will be able to repurpose equipment and space to 14-nanometer.

Smith said that the company won't be taking "excess capacity charges," but that the impact of the lower utilization is a key driver to the higher chip manufacturing costs that it now expects for the year.

Capex down for a number of reasons
The final big item here is that Intel reduced its capital expenditure forecast from $10 billion (which had already been reduced from $10.5 billion last quarter) to just $8.7 billion this year. Intel's CFO says that this is due to a number of factors.

First of all, Smith said that the company is seeing better-than-expected yield rates on its 14-nanometer technology. This means that Intel is getting more chips per wafer, meaning it needs to run fewer wafers to get the same desired chip output on that technology.

Secondly, in the CFO commentary provided with the earnings release, Intel said that this capital expenditure forecast reduction is driven by both "increased reuse of capital on 14nm" -- in other words, Intel is repurposing equipment used to build older generation technologies to build newer 14-nanometer chips -- and "the alignment of capacity with demand."