Just weeks after an upbeat assessment about its prospects, chip giant Intel cut its revenue outlook for the third quarter based on weak demand for consumer PCs.
The company said in a statement that third quarter revenue will be $11 billion, give or take $200 million. That's down from a previous outlook of $11.2 billion and $12 billion.
Wall Street was expecting revenue of $11.52 billion with earnings of 53 cents a share.
Revenue is being affected by weaker than expected demand for consumer PCs in mature markets. Inventories across the supply chain appear to be in-line with the company’s revised expectations.
Intel expects gross margins to be about 66 percent, down from the 67 percent it projected. Enterprise demand appears to be solid.
The news is quite a turnabout from Intel's outlook on July 13. On its second quarter earnings conference call, Intel was upbeat. Nevertheless, some analysts noted that semiconductor companies are always last to know that a downturn is coming.
However, Intel's news shouldn't be that surprising and arguably could have been worse. Analysts have been downgrading Intel and AMD because the Asia PC supply chain looks worrisome.
Among the key worries over the last month: