Intel slashes fourth quarter predictions

INTEL SLASHED ITS fourth-quarter guidance yesterday, warning its sales could slump as much as 19 per cent, dealing profits a nasty blow. Following suit, others in the semiconductor sand pit began filing their pessimistic outlooks for the end of the year.

Intel expects spending slowdowns caused by the economic crisis. Chipzilla predicted its previous sales forecast would now have to be reduced by about $1 billion, as computer makers buy fewer chips and work their way through their existing inventory to save cash.

The chip maker is now expecting fourth-quarter revenue of between $8.7 billion and $9.3 billion, down from earlier projections to Wall Street last month of between $10.1 billion to $10.9 billion. Intel’s Q4 revenue last year was $10.7 billion. The firm's spinners noted the forecast cuts were due to " significantly weaker than expected demand in all geographies and market segments ".

It isn’t just Intel’s revenues which seem to be taking a dive, the firm’s gross profit margin is also taking a hit, now predicted at about 55 per cent of revenue, down from about 59 per cent.

The announcement by Intel followed one from Cisco last week, in which the network equipment maker also revised predictions and estimated a 10 per cent drop in sales. Also last week, Lenovo reported a profit plunge of 78 per cent.

With Intel on the bandwagon, Applied Materials and National Semiconductor also took the opportunity to spread some doom and gloom. Applied, announced it may have to lay off 1800 souls, said it was cutting back its Q4 profit predictions by 45 per cent to $231 million. Applied’s sales also tumbled 14 per cent, to $2.04 billion from $2.37 billion.

National Semiconductor said it was lowering sales forecasts for this quarter by over 10 per cent, now predicting revenue of between $420 million and $425 million.

Intel stock had dropped in regular trading on Wednesday by 2.9 per cent (49 cents) to $13.52, but after announcing the predictions cut, shares fell a further 7.2 per cent in after-hours trading to $12.55. The company’s shares have lost about half their value since a 52-week high of $27.99, last Dec. 6th. µ