Intel slashed on August 27 its third quarter revenue forecast due to lower demand for computers, leading to a sharp selloff of the microchip giant's shares. It said revenue would come in around 11 billion dollars, lower than the earlier estimate of 11.2 to 12 billion dollars.
"Revenue is being affected by weaker than expected demand for consumer PCs in mature markets," the world's biggest chip manufacturer said in a statement. "Inventories across the supply chain appear to be in-line with the company's revised expectations," it said.
The impact of lower volume is being partially offset by slightly higher average selling prices stemming from solid enterprise demand, it added. Robert Enderle, an independent technology market analyst, said that Intel's new forecast was due to an influx of new technologies such as Apple's IPad tablet computer that is hitting the traditional personal computer market.
Fears that the US economy was slower to recover than expected is "also doing pretty horrible things to consumer confidence and consumer demand for high-ticket items" such as computers, Enderle said.
In July, The Santa Clara, California-based technology bellwether reported a second-quarter net profit of 2.9 billion dollars compared to a loss of 398 million dollars during the same quarter a year ago. On August 19, Intel announced it was buying Internet security firm McAfee for 7.68 billion dollars, as the computer chip giant sought to expand its reach to mobile and wireless devices.
The acquisition of one of the world's largest anti-virus software companies underscored Intel's bid to move into mobile phones, in-car navigation systems, televisions and medical devices as the traditional PC market neared saturation.