eWEEK content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More.
Intel Corp., in an acknowledgment that its sales are proving disappointing, Thursday lowered its revenue guidance for the third quarter.
While revealing few details in its scheduled midquarter update, the company said revenues would come in “slightly below the midpoint” of the $6.3 billion to $6.9 billion range it forecasted in July. In addition, Intel lowered the upper end of its revenue from $6.9 billion to $6.7 billion.
Prior to issuing its update, shares of Intel, based in Santa Clara, Calif., fell to a five-year low Thursday, dropping 6.2 percent to $15.11.
The accuracy of the chip makers outlook hinges greatly on its performance this month, which traditionally is the strongest sales period of the third quarter. Given that, a recent pickup in sales spurred by price cuts last week has made the company optimistic the month will live up to expectations, said Intel President Paul Otellini.
“Were one week into September, and weve seen very good, very strong distributor channel sales out after our price moves in early September, so that gives us another notch of confidence,” Otellini told market analysts in a conference call tied to the midquarter update.
While stressing that Intels earnings are following within the range of its earlier guidance, Otellini conceded that the quarter is not shaping up to be a strong as hoped, and noted that “microprocessor unit sales are trending toward the lower end of the normal seasonal pattern.”
The senior executive, who also serves as the companys chief operating officer, offered some perspective on global market conditions, a key factor since overseas sales account for about 70 percent of Intels total revenue.
Overall, Otellini said, U.S. and European sales are on target with forecasts, but sales in Asia and Japan have been “slightly softer than we expected.” The statement appears to confirm analysts concerns that growth in those two market regions are cooling after years of strong annual increases in demand.
Aside from its PC and server processor businesses, which account for the majority of Intels revenue, the chip maker said sales of its flash memory and communications products remained flat to down.
Intels reduced earnings outlook comes on the heels of reports by several Wall Street brokerages projecting that IT spending will remain sluggish through the remainder of this year and that a once-hoped-for sizable pickup in consumer PC buying may fall well short of expectations.