Intel Corp. lowered its revenue projections for its third quarter yesterday, citing slow consumer purchases across the globe.
The world's largest chipmaker reported that it expects revenue for the three-month period ending Sept. 30 to be between $8.3 billion and $8.6 billion, compared with a previous range of $8.6 billion to $9.2 billion.
"What we're seeing across the world is demand less than we expected," said Chief Financial Officer Andy D. Bryant, in a conference call with investors yesterday. "You don't get the sense of momentum building into September that you would usually get at this time of the year."
"The vast majority [of sales weakness] is in the consumer space, in the retail space," he said.
Bryant pointed to weaker-than-expected sales in processors and flash memory, a type of technology often used in gadgets such as cell phones and personal digital sales, for the revision. Intel cut its prices for processors used in desktop computers earlier this quarter to reduce built-up inventory.
Intel's profit nearly doubled in its second quarter, compared with the second quarter a year ago. But Intel's stock has been sinking throughout the year, as analysts debate whether another tech downturn is close at hand.
The third fiscal quarter typically represents the beginning of an annual surge in business for Intel and chipmakers in general. Intel forecast, at the onset, a three-month period that would be even stronger than typical seasonal trends. Yesterday's announcement means Intel now believes business will perform closer to what it usually does this time of year.
"The last two years, the only thing driving business has been the consumer side. This year, the business side has picked up quite a bit," to make up for slowing consumer sales, said Jim Feldhan, president of Semico Research Corp. of Phoenix.
Intel share rose 20 cents throughout the day and closed at $21.63, before dropping $1.48 after the announcement. Intel, considered a bellwether stock in the tech sector, also cast a pall on other stocks, with shares of rival chipmaker Advanced Micro Devices Inc. also suffering in after-market trading.