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Intel Jolts Tech Sector with Lowered Outlook

Sept. 7, 2012
"Intel is in a bind," said Paul Ausick at 24/7 Wall Street. "The company's chip customers are not selling as many PCs or servers as they had expected, and Intel's lack of a real competitive product in the fast-growing mobile market is continuing to take its toll."

Intel Corp. (IW 500/26) sharply cutting its revenue outlook for the current quarter, citing weak demand for personal computers and slower growth from emerging economies.

The world's largest chipmaker is being hit by a shift away from traditional PCs to mobile devices, and by a sluggish global economy. It also is hurt by consumers holding back on purchases ahead of the release in late October of the Windows 8 operating system.

Intel said third-quarter revenue would be in the area of $13.2 billion, down from an earlier expectation of $13.8 billion to $14.8 billion "as a result of weaker than expected demand in a challenging macroeconomic environment."

The company also lowered its profit margin forecast and withdrew its guidance for full-year results.

Shares of the California tech giant fell 2.8% to $24.40 in morning trade.

Analyst Vijay Rakesh at Sterne Agee said Intel is seeing "multiple challenges in the PC space," with slower-than-expected sales of the so-called ultrabooks and tougher pricing for other computers.

Rakesh said this environment also suggests "headwinds for the rest of the PC peers" including Advanced Micro Devices, down 4.1% Friday, and Nvidia, down 3.8%.

"Intel is in a bind," said Paul Ausick at 24/7 Wall Street. "The company's chip customers are not selling as many PCs or servers as they had expected, and Intel's lack of a real competitive product in the fast-growing mobile market is continuing to take its toll."

Intel is to release its earnings October 16.

Copyright Agence France-Presse, 2012

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