Intel more pessimistic about PC market, lowers Q1 revenue forecast by 7%

Citing weaker than expected business desktop PC demand and lower than expected inventory levels across the PC supply chain, Intel just slashed its first-quarter revenue forecast by 7 percent. Two months ago the chip giant guided first quarter revenue of $13.7 billion, plus or minus $500 million, whereas it now expects revenue of only $12.8 billion, plus or minus $300 million.

Intel shares are down 4.11 percent to $31.0 at press time while AMD is down 3.52 percent to $2.74.

Intel Corporation today announced that first-quarter revenue is expected to be below the company's previous outlook. The company now expects first-quarter revenue to be $12.8 billion, plus or minus $300 million, compared to the previous expectation of $13.7 billion, plus or minus $500 million.

The change in revenue outlook is a result of weaker than expected demand for business desktop PCs and lower than expected inventory levels across the PC supply chain. The company believes the changes to demand and inventory patterns are caused by lower than expected Windows XP* refresh in small and medium business and increasingly challenging macroeconomic and currency conditions, particularly in Europe.

The data center business is meeting expectations.
The company is forecasting the mid-point of the gross margin range to remain at 60 percent, plus or minus a couple of percentage points, as lower PC unit volume is offset by higher platform average selling prices. Expectations for R&D and MG&A spending and depreciation in the first quarter remain unchanged.

All other expectations have been withdrawn and will be updated with the company's first-quarter earnings report on April 14.