Intel Lowers Sales Outlook Slightly
Buffeted by a weak economy that tempered back-to-school buying, Intel Corp. said Thursday that its third-quarter revenue probably would come in slightly below previous expectations.
The world’s biggest semiconductor company said sales probably would be $6.3 billion to $6.7 billion, down from its previous estimate of $6.3 billion to $6.9 billion, for the quarter ending Sept. 28.
Though the adjustment is minor, it suggests that a technology recovery is unlikely this year as consumers hold off buying computers and businesses continue to wait for a broad economic recovery before resuming significant spending on new technology, analysts said.
“It’s pretty clear that the sluggish economy and the retrenchment of consumers have combined to pressure near-term PC demand,” said Mark Edelstone, an analyst with Morgan Stanley who gave Intel an “equal weight” rating, meaning Intel is expected to perform on par with other semiconductor companies followed by the investment banking firm. “It’s painfully clear we’re not seeing the normal demand patterns.”
Shares of the Santa Clara, Calif.-based chip giant rose to $15.66 in after-hours trading after the company’s forecast. Its price had fallen $1 to a multiyear low of $15.11 in regular trading on Nasdaq.
“Microprocessor unit sales are at the lower end of the normal seasonal range,” said Intel’s president, Paul S. Otellini.
He also said sales in Asia and Japan were “softer than we expected.”
Intel last week cut prices for nearly all chips by as much as 52%.
Chip companies traditionally have benefited from back-to-school buying in the third quarter. This year, however, the effect is muted by consumer skittishness.
The back-to-school bump in sales “is going to be less than people expected,” Otellini said.
Revenue for the chip industry has languished since last year, when the market suffered its worst decline.
Analysts forecast a slow recovery. UBS Warburg last week cut 2002 estimates. It said this year’s chip revenue could fall as much as 2% or rise as much as 2%. It previously predicted sales would be unchanged or grow as much as 5%.
