Intel expects $1bn Q4 shortfall

Intel chief Paul Otellini expects the coming downturn to be the worst in his lifetime

Intel has issued a surprise warning that its fourth-quarter revenues will be $1bn lower than expected.

Chief executive Paul Otellini reported Intel's widest ever range of revenue forecasts for the fourth quarter in the company's third-quarter earnings statement in October, and said that Intel would issue an update in December.

However, in a surprise move, the company issued a warning that the situation was worse than had been anticipated.

"Intel now expects fourth-quarter revenue to be $9bn [£6.02bn], plus or minus $300m [£200m], lower than the previous expectation of between $10.1bn [£6.76bn] and $10.9bn [£7.29bn]," said the company in a statement.

"Revenue is being affected by significantly weaker than expected demand in all geographies and market segments. In addition, the PC supply chain is aggressively reducing component inventories."

The margin Intel makes on sales has also been cut, from an expected 59 per cent to 55 per cent. The company has now said that it will not comment on results until January.

It appears from the statement that sales in developing markets will not be enough to counteract the drop in demand in the West. Last week Otellini reportedly said that he expects the coming downturn to be the worst in his lifetime.

The stock markets have reacted badly to the news, cutting Intel's share price by nearly 10 per cent.