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Intel shaves Q3 forecasts

Not that bad

ComputerWire: IT Industry Intelligence

Intel Corp trimmed back its expectations for the third quarter yesterday but insisted chip sales will return to seasonal demand patterns this year after 24 months of chaos.

The Santa Clara, California-based vendor said revenues for the third quarter would be "slightly below the midpoint of the previous range of $6.3bn to $6.9bn" and instead within a narrower range of $6.3bn to $6.7bn. Gross margin is still expected to be 51%, plus or minus a couple of percentage points.

Microprocessor sales are "trending toward the lower end of the normal seasonal patter" said Intel, and while its flash business is in line with expectations, demand for other comms products remains soft.

Intel has long predicted that the second half of this year would show a return to traditional demand patterns for the vendor, after the convulsions of 2000 and 2001 as the PC industry retreated in the wake of the Y2K buying splurge, the collapse of the dot com boom and a global economic slowdown.

Chief operating officer Paul Otellini said despite yesterday's update, "the quarter and the year are progressing consistent with our previous outlook." He said the company was planning for seasonal second half, "and that's still our plan."

Yesterday's narrowing of predictions was largely prompted by the company's performance in the Far East. The US and Europe were about where the company expected, said Otellini. However, Asia and Japan were "slightly softer than expected."

Hopes of a strong back to school season in the US PC market appear to have been dashed. However, Otellini offered come comfort, saying it was important to include direct and channel sales in the equation. "It is going to be less than expected, but not quite as poor as looking just at retail would suggest."

© ComputerWire

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