SAN FRANCISCO, Fri Sep 7, 2012 – Intel Corp. cut its third-quarter revenue estimate more than expected on Friday due to a decline in demand for its chips as customers reduce inventories and businesses buy fewer personal computers.
Intel also said it was scaling back capital spending as a result of the business slowdown. Intel’s stock fell 3.6 percent, and shares of ASML and other companies that make chip-manufacturing equipment also lost ground.
A revision of Intel targets had been anticipated by some analysts after PC makers Hewlett Packard and Dell Inc. warned of slow demand last month, a development that has been compounded by a shaky global economy and consumers shifting toward tablets and smartphones.
But the 8 percent reduction in the top chipmaker’s revenue outlook was much more severe than expected. Intel also withdrew its full-year forecast.
The scaled-back outlook comes just days ahead of a major event where Intel will tout a new generation of processors that consume less power, central to its strategy of reinvigorating a stagnant PC industry.
Bernstein analyst Stacy Rasgon said the size of the Intel cut was surprising and was a worrying new sign that the company is seeing weakness in PC sales to businesses and governments, known as enterprise sales.
“They also have weakness in enterprise PCs in emerging markets. In the last six to eight quarters, consumers have been weak but the enterprise was strong. Now the enterprise is weak,” Rasgon said.