Intel scales down sales forecast by $1 billion

Computer chip manufacturer Intel Corporation has warned that its fourth-quarter sales forecast would be down by about $1 billion, on account of ''significantly weaker'' demand across its product lines. 

The company had earlier said sales would be anywhere between $10.1 billion and $10.9 billion, but has now revised those numbers downwards to $9 billion in terms of revenues, with a margin of $300 million up or down. It has also said that its profit margins will also not meet expectations, according to a statement.

Intel's chips power almost 75 per cent of the world's computers. The company says that its customers have reduced orders on account of falling sales, indicating that the economic slowdown that was plaguing the US has now spread to the rest of the world. 

Information technology industry analyst firm IDC also predicted that global technology spending would now grow less than predicted next year, with the industry facing the worst slump since the dotcom bust towards the end of 1999 – 2000. It said that spending would increase only around 2.6 per cent in 2009, much lower than its earlier estimate of 5.9 per cent. It also said that growth in the US would in all probability slow to 0.9 per cent, less than a fourth of the pace IDC forecast in August.

Intel has also scaled back its spending plans by $100 million, to $2.8 billion during the fourth quarter. 

Shares of Intel fell as much as five per cent in pre-open trades on Thursday. In its statement, Intel said its "revenue is being affected by significantly weaker than expected demand in all geographies and market segments,'' adding that ''in addition the PC supply chain is aggressively reducing component inventories."

Intel now expects its gross margin in the fourth quarter to be 55 per cent, "plus or minus a couple of points," lower than its previous expectation of 59 per cent, mainly on account of lower revenue and charges associated with ''the weaker-than-expected demand environment." 

For the full year, Intel now expects to spend $11.4 billion on research and development, in lieu of the previously forecast of around $11.5 billion.