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updated: 9/7/2012 8:31 AM

Intel cuts 3Q revenue outlook on softer demand

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Associated Press

SANTA CLARA, Calif. -- Intel is cutting its third-quarter revenue forecast due to softer-than-expected demand for its chips amid difficult economic conditions.

Intel chips go into about 80 percent of personal computers and into a vast number of servers as well, making it a bellwether for spending on computers.

The company now expects revenue of about $13.2 billion, but says that figure could be up or down $300 million. Its prior guidance was for revenue between $13.8 billion and $14.8 million.

Analysts surveyed by FactSet predict revenue of $14.21 billion.

Intel Corp. shares dropped 40 cents, or 1.6 percent, to $24.70 before the market open.

Intel said emerging market demand is slowing and that there is weakness in its enterprise PC unit. It is also seeing customers trimming inventory in the supply chain compared to the normal inventory growth it typically sees in the third quarter. Intel said that its data center business is meeting expectations.

The Santa Clara, Calif., company also lowered its gross margin forecast to 62 percent, give or take 1 percentage point. Its previous forecast was for gross margin of 63 percent, give or take 2 percentage points.

The company will report its third-quarter financial results on Oct. 16.

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