Intel, citing reduced demand for desktop and notebook processors, cuts its fourth-quarter financial forecast. Intel, the world's largest producer of x86 processors, now believes that its fourth-quarter revenue will only reach about $9 billion, rather than the $10.1 billion to $10.9 billion the company predicted just a few weeks ago. Intel says demand for processors is weak across the globe and PC makers are tightening their supply chain inventories.
is cutting back its fourth-quarter sales and revenue forecasts,
saying there has been less demand for its desktop and notebook processors in
the United States
and throughout the rest of the globe.
In a statement released Nov. 12, Intel said its revenue for the fourth
quarter of 2008 is expected to be below what the company announced Oct. 12 during
its third-quarter earnings report. Now, Intel expects fourth-quarter revenue of
$9 billion, "plus or minus $300 million," rather than the previous
expectations of $10.1 billion to $10.9 billion.
Intel originally promised to offer further financial guidance on Dec. 4, but
the company pushed its revised forecast update to Nov. 12. In a statement,
Intel said the new revenue forecast reflects weaker worldwide demand for its
processors in all the company's market segments, including desktops, notebooks
Intel also found that its partners in the PC industry are tightening their
supply chains and reducing component inventories.
The latest report from Intel is another blow to the IT industry and a sign
that the financial crisis, which started on Wall Street in September, is
beginning to have an impact on the overall economy.
Earlier in November, Advanced
Intel's main rival in the x86 chip market, reported that it
would cut another 500 employees from its work force.
Dell is also looking
to save costs by asking employees to take voluntary, unpaid time off and saying
Dell will reduce the number of outside companies it uses for various projects.
On the same day that Intel cut its revenue forecast, research firm IDC
issued a report that found IT spending in the United States would grow less
than 1 percent in 2009.
The rest of the world can expect IT spending to
increase less than 3 percent next year.
In addition to lowering its revenue forecast for the
fourth quarter, Intel reported that its gross margins-an important indicator of
profitability in the chip business-are expected to be about 55 percent, lower
than the original forecast of 59 percent. Finally, Intel said it will reduce
its overall spending in the quarter, including R&D, from $2.9 billion to