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Fri, Jan 09, 2009 - Page 10 News List

Intel warns 4Q sales may still miss reduced target

AP , SAN FRANCISCO

Even after sharply reducing its outlook for the fourth quarter, Intel Corp said on Wednesday that it would miss its revenue projection by about US$500 million, a sign that PC makers and buyers are being more tightfisted than it seemed only two months ago.

Santa Clara, California-based Intel, the world’s largest chipmaker, now says revenue was US$8.2 billion for the last three months of last year, a 23 percent decline from the year-ago period.

Analysts surveyed by Thomson Reuters were expecting US$8.7 billion, which was at the low end of the range Intel provided in November of US$8.7 billion to US$9.3 billion.

Intel’s profits also are being hit. It expects its gross profit margin to be at the bottom of its previous guidance, which was for 53 to 57 percent of revenue.

The company is scheduled to provide more detail when it releases full fourth-quarter earnings next Thursday.

The fact that Intel has had to revise its fourth-quarter guidance twice indicates how deeply the economic meltdown has damaged the semiconductor industry. It also reveals how hard it is for even conservative companies — Intel formally stopped doing mid-quarter updates in 2006 — to figure out how badly they’re being hurt.

Intel blamed the latest revision on weaker-than-expected demand, piling up in a chain reaction. Businesses are putting off upgrading to new computers until the economy and their finances improve. And consumers, singed by layoffs and falling home prices and stock portfolios, have scaled back their spending as well. In turn that has prompted PC makers to try to save money by burning through their existing inventories of chips instead of buying lots of new ones.

Intel’s primary competitor in the market for microprocessors, which are the brains of personal computers, has also slashed its forecasts.

Sunnyvale, California-based Advanced Micro Devices Inc warned last month that its fourth-quarter sales would drop 25 percent from the previous quarter. That implies a drop of 33 percent from the previous year.

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