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Intel cut sales forecast on weak demand

Friday, September 07 15:45:51

Intel cut its third-quarter revenue estimate today and withdrew its full-year forecast amid a decline in demand for its chips as customers reduce inventory and businesses buy fewer personal computers.

A revision of targets had been anticipated by many analysts after competitors such as Hewlett Packard and Dell warned of slow demand for PCs last month, a development that has been compounded by a shaky global economy and consumers shifting toward tablets and smartphones.

But the cut by Intel, the world's largest chipmaker, was much more severe than analysts had expected.

The company said it now expects third-quarter revenue of $13.2 billion, plus or minus $300 million, down from its previous forecast of $13.8 billion to $14.8 billion. Analysts on average expected $14.2 billion. Intel is due to report its third-quarter results in October.

Bernstein analyst Stacy Rasgon said the magnitude of the warning was surprising, adding that it was a worrying new sign that Intel is seeing weakness in PC sales to businesses and governments, known as enterprise sales.

"They also have weakness in enterprise PCs in emerging markets. In the last six to eight quarters, consumers have been weak but the enterprise was strong. Now the enterprise is weak," he said.

Intel's warning comes at a time when PC makers should be gearing up to build more computers than usual ahead of the launch of Microsoft Corp's Windows Phone 8 operating system.

Intel has been banking on the Windows 8 release in October to help slow the trend of consumers buying smartphones and tablets instead of personal computers. (C ) Reuters