Intel Reduces 3Q Expectations On Softer-Than-Expected Sales

The company said it now anticipated revenue of between $8.3 billion and $8.6 billion for the period, compared with a previous forecast of between $8.6 billion and $9.2 billion. It also lowered its gross profit margin expectation from 60 percent to 58 percent range.

After word of Intel's downbeat third-quarter update, many investors reacted by dumping the chip maker's stock. By mid-day on Friday, shares of Intel were down $1.59 per share to $20.04 - dropping to its lowest price in a year.

The Santa Clara, Calif.-based chipmaker said global demand for its core Intel Architecture processor products was running weaker than expected during the quarter, combined with a previously expected reduction in excess component inventory. The company's flash memory business was also weaker than expected.

"The big change is, we were shipping fewer units than we anticipated," Intel Chief Financial Officer Andy Bryant said in a conference call with analysts. "We don't sense any building momentum right now."

However, Bryant described the quarter as proceeding at the low-end of seasonal patterns, and that the company is "counting on September to be a fairly typical September based on what we see in August and July."

While the softer-than-expected market was not limited to any specific geography, Bryant said retail and consumer markets were showing more weakness than others.

The company slightly disappointed some analysts with its revenue and profit results for the second quarter, and, at the time, said it had overbuilt an inventory of products that would need to be taken down during the next quarter. However, Bryant also said that a recent Intel price cutting move did not seem to have the hoped-for results.

The company did not provide details on a segment-by-segment basis, nor could Bryant say whether the rest of the industry was seeing the same slowdown. Its primary rival in the PC and server space, Advanced Micro Devices , has not issued a mid-quarter update of its own.

Intel's third quarter ends Sept. 25. It is scheduled to report its full quarterly earnings Oct. 12.