Intel Scales Back Second-Quarter Sales Forecast

The chip-making giant expects sales for the period ending June 29 to be between $6.2 billion and $6.5 billion, down from the previous estimate of $6.4 billion to $7 billion.

Analysts were expecting second-quarter sales of $6.7 billion and net earnings of 15 cents a share. Last year, the company recorded sales of $6.3 billion and profits of 12 cents for the period.

The quarter is typically slow for Intel, as there are no major holidays or back-to-school sales to boost sales growth. There also is little evidence of major increases in business computer sales.

"Our concerns here relate to the lack of visibility into the PC end market, particularly on the corporate side, rather than anything company specific," Merrill Lynch analyst Joseph Osha said in a research note before Intel's announcement.

Osha lowered his intermediate-term rating to "neutral" from "strong buy"but is maintaining a "strong-buy" rating for the long term.

After a weak April and an only slightly stronger May, Intel has catching up to do in June, which can represent almost half of all second-quarter sales, says Jonathan Joseph, a Salomon Smith Barney analyst.

Early second-quarter sales also may have been reduced by customers waiting for Intel's May 26 price cuts, which averaged about 31 percent for desktop processors and 46 percent for notebook chips, Joseph says.

Shares of Intel were down $1.18, to $27, in Thursday trading on the Nasdaq Stock Market. In the after-hours session, they plunged another $2.42.

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