Intel submits to economic downturn

 

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By Stuart Turton and Reuters

Posted on 13 Nov 2008 at 11:48

Intel has slashed its fourth quarter revenue forecast, as the company struggles with the slump in global demand.

The chip giant trimmed its forecast by 14%, projecting earnings of $9 billion, down from its previous forecast of $10.5 billion.

The new forecast is a billion less than its third quarter earnings of $10.2 billion, with the company warning that the PC industry is aggressively reducing component inventories. Intel makes about 80% of the world's microprocessors.

The warning was worse than many had feared, fueling worries that the slump in global technology spending was sharper than anticipated and could last longer than previously predicted.

"Obviously this has implications for Microsoft in the PC market," says Taunya Sell, analyst at Ragen MacKenzie. "Its business tracks PC shipments as well. I think this is affecting everyone, and those that say it's not will have to come to the altar in January."

Sell says analysts are going to have to adjust their 2009 forecasts "to reflect the new reality."

"The normal pattern is for Intel to be down 10% to 12% in the March quarter and now we are seeing that type of behavior in the December quarter," notes American Technology Research analyst Doug Freedman. "So the real question that investors have ... is what is March going to look like off of this new number."