Intel isn't out of trouble yet, analysts say.
The chipmaker is cutting prices on its flagship 4 processor to speed its adoption and compete with rival Advanced Micro. Advanced Micro won 21 percent of the market during the quarter, up from 17 percent in the December period -- while Intel fell for the third consecutive quarter to 77 percent from 82 percent, according to preliminary data from Mercury Research.
At the same time, Intel's non-PC business is still suffering.
The communications market faces more difficulties because manufacturers still have extra inventory and they didn't recognize the problem as quickly, Intel's Bryant said. It's too soon to tell when a recovery might come in that area, he said.
Communications clients have extra flash memory, which stores data when devices are turned off. The drop in sales of chips for servers computers that run Web sites was more severe than the decline in desktop-PC chips, executives said.
``If you're focused on networking and communication, from the chip side you're in a world of pain for the next year,'' said Thomas Weisel Partners analyst Eric Ross.
Intel will update its targets in a mid-quarter conference call June 7.
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