Intel Revises Q3 Projections Downward, Reflecting Escalating Slump in PC Sales

There are some glum faces at Intel (News - Alert) today. The world’s largest chip maker said on Friday that it expects to miss its original third-quarter estimates, and has revised its financial guidance numbers lower. Intel says it now expects to post third-quarter revenue of $13.2 billion, which shows a seven percent decline from the same quarter last year, which saw total revenue of $14.2 billion.

These estimates are well below a financial guidance forecast made in July that predicted third-quarter revenue between $13.8 billion to $14.8 billion.


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The news is unlikely to cheer up Wall Street very much today. On Friday, after the announcement, the company's shares fell by 90 cents, or 3.6 percent, to close at $24.19.

Intel is laying the blame for the bad news on declining sales and reduced demand for new PCs among businesses and a “challenging" economic environment. This means Intel is unlikely to be alone in its bad news, sharing the PC sales slump with many companies whose revenue depends on the sales of desktop computers. Friday saw a fall in share prices for Microsoft, Hewlett-Packard and other chip-makers, including Advanced Micro Devices (News - Alert) Inc. and Nvidia Corp.

Intel supplies the chips that are used in about 80 percent of all PCs and many servers as well, making it a good oracle for the future of the PC market, which has seen a decline not only due to the economy, but the fact that many companies and individuals are forgoing PCs in favor of more portable options, such as tablet devices. The AP is reporting that the slowdown in PC sales that will occur during the second half of 2012 will be the greatest in the history of PC sales, according to a Citigroup analyst.

PC makers have been adjusting to the uncertainty by ramping down their production and reducing their orders for more chips, according to Intel, but they may not be ramping down fast enough and far enough.

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