Intel Lowers Revenue Forecast As PC Sales Falter - InformationWeek

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Infrastructure // PC & Servers

Intel Lowers Revenue Forecast As PC Sales Falter

As a result, analyst group Gartner dropped its projection for 2009 revenue growth to 1% more than this year, or $282 billion.

Intel on Wednesday lowered its fourth-quarter earnings forecast, as lower-than-expected sales struck across the globe and in every PC market segment.

The bellwether for the tech industry lowered its revenue outlook to $9 billion, plus or minus $300 million. The company had projected revenue of between $10.1 billion and $10.9 billion.

"Revenue is being affected by significantly weaker-than-expected demand in all geographies and market segments," the company said in a statement. "In addition, the PC supply chain is aggressively reducing component inventories."

In addition, Intel lowered its gross-margin projection to 55% from 59%, primarily because of the sales drop and other charges related to weaker-than-expected demand. Intel plans to release full financial results for the quarter on Jan. 15.

Intel's lowered forecast is a grim reminder of a world economy reeling from the U.S. financial crisis. In addition, the disclosure is one more reason to expect weak sales during the all-important holiday-shopping season for U.S. retailers.

Intel's revised outlook followed less than two weeks after market researcher Gartner slashed its revenue forecast for the semiconductor industry based on a drop in demand for such electronics as PCs and mobile phones. "Mounting evidence suggests that the semiconductor industry will see negative growth starting in the fourth quarter of 2008, and that this will continue throughout most of 2009," Gartner analyst Bryan Lewis said at the time.

As a result, Gartner dropped its projection for 2009 revenue growth to 1% more than this year, or $282 billion. Gartner had forecast a 7.8% increase to $307.7 billion.

Earlier, Gartner warned that it was seeing a general weakening in demand in the consumer electronics supply chain from equipment manufacturers to makers of microprocessors. Rather than increasing production for the holiday season, equipment manufacturers were making fewer-than-expected mobile PCs, digital TVs, DVD players, and other electronics, the analyst firm said.

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