Intel scales back outlook for quarter

Intel Corp. lowered its gross margin forecast for the current quarter Monday, citing weaker pricing on certain types of memory chips. The company’s shares fell 2 1/2 % in extended trading.

Intel said it expected gross margin in the first quarter of 54%, plus or minus a point. Its previous forecast for gross margin was for 56%, “plus or minus a couple of points.”

Intel cited lower prices for NAND flash memory chips, a market that saw dramatic price declines last year. Intel said all other business expectations remained unchanged in the quarter.

“I’m not surprised. NAND flash exposure is what had them cautious on their full-year guidance,” said Douglas Freedman, an analyst at American Technology Research. “The piece of the equation that we were missing was the fact that they were ramping NAND flash output into a weak pricing environment.”

Research firm ISuppli Corp. last month slashed its 2008 revenue growth forecast for NAND flash memory to single-digit percentages from a previous estimate of 27% growth.

The company said global NAND flash revenue would rise “marginally” in 2008 from the $13.9 billion booked in 2007, amid “troubling signs” of order reductions and weakness in consumer spending.

NAND flash memory is used in consumer electronics, such as flash storage cards, MP3 players and USB flash drives.

Intel made the announcement after the close of regular trading. The company’s shares fell 2% in after hours trading to $19.60 from $20.01.