Intel Corporation (NASDAQ:INTC) announced that it has cut its third quarter sales guidance to $13.2 billion (plus or minus $300 million) from its previous guidance of $13.8 to $14.8 billion. In its announcement, the company stated “Relative to the prior forecast, the company is seeing customers reducing inventory in the supply chain versus the normal growth in third-quarter inventory; softness in the enterprise PC market segment; and slowing emerging market demand. The data center business is meeting expectations.”
Intel has scheduled October 16th as the date it will announce actual third quarter financial results.
Since the announcement, INTC’s price as been dropping as investors fear an extended slowdown for Intel. Demand for its PC chips is hurt by both the generally sluggish world economy and the fact that many are choosing to buy tablets not powered by Intel products as a replacement for laptops, rather than as an additional device. The “customers reducing inventory in the supply chain” as noted by Intel above is likely due to manufacturers waiting to see how Windows 8 will be received and which devices will be most popular with consumers before making big commitments.
On the bright side, the data center business is meeting expectations. Also Intel continues to develop and introduce new chips that offer ever higher performance while reducing energy requirements. Such chips will be able to get faster results from cloud computing and data-intensive applications such as analytics.