(iTers News) - Intel Corporation fell prey to sluggish sales of PCs, which suffered the worst yearly  decline on record in the first quarter. The world’s largest PC microprocessor chipmaker today reported a 2.5% year-on-year drop in the first quarter revenue to US$12.6 billion. Its net income also slumped 25% to hit US$2 billion from a year ago.

Yet, the tepid performance was expected earlier, as research firm IDC reported that worldwide PC sales collapsed 14% in the first quarter – the worst yearly decline since the market research firm started crunching numbers in 1994. Intel’s PC

Client Group, which mainly sells microprocessor chips to PC vendors, suffered a 6% year-on-year drop in the revenue in the first quarter ended on March 31.

Living up to expectations, its Data Center Group, which mostly sells data center server microprocessor chips, chalked up a 7.5% year-on-year gain in the first quarter revenue to US$2.6 billion.

Other Intel Architecture Group netted revenue of US$1.0 billion, down 9.0% year-on-year



Yet, Intel remained bullish on the 2nd quarter outlook, pinning hopes on sales of chips to data center as well as smart phone and tablet PC markets.

"Amidst market softness, Intel performed well in the first quarter and I'm excited about what lies ahead for the company," said Paul Otellini, Intel president and CEO.

"We shipped our next generation PC microprocessors, introduced a new family of products for micro-servers and will ship our new tablet and smartphone microprocessors this quarter. We are working with our customers to introduce innovative new products across multiple operating systems. The transition to 14nm technology this year will significantly increase the value provided by Intel architecture and process technology for our customers and in the marketplace," added he.

CEO , Paul Otellini is scheduled to retire next month. His successor hasn’t been picked up, yet.