INTEL CUT its third-quarter revenue estimate more than expected yesterday due to a decline in demand for its chips as customers reduce inventories and businesses buy fewer personal computers.
Intel also said it was scaling back capital spending as a result of the business slowdown. Intel’s stock fell 3.6 per cent, and shares of ASML and other companies that make chip-manufacturing equipment also lost ground.
A revision of Intel targets had been anticipated by some analysts after PC makers Hewlett Packard and Dell warned of slow demand last month, a development that has been compounded by a shaky global economy and consumers shifting toward tablets and smartphones.
However the 8 per cent reduction in the top chipmaker’s revenue outlook was much more severe than expected. Intel also withdrew its full-year forecast.
The scaled-back outlook comes just days ahead of a major event where Intel will tout a new generation of processors that consume less power, central to its strategy of reinvigorating a stagnant PC industry.
Bernstein analyst Stacy Rasgon said the size of the Intel cut was surprising and was a worrying new sign that the firm is seeing weakness in PC sales to businesses and governments.
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’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.
Devices running Windows 8 and powered by Intel’s latest components will be a major draw when thousands of technology professionals descend on the annual Intel Developer Forum in San Francisco next week.
Intel 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.
Intel shares were down 3.6 per cent to $24.18 in midday trading. AMD was off 4.6 per cent at $3.49.
ASML’s Nasdaq-traded shares fell 2 per cent to $56.71, and chip gear maker Applied Materials fell 1.05 per cent to $11.78. – (Reuters)
