Intel's fourth quarter unravels

Intel said Wednesday that its fourth quarter outlook will fall short of projections the company made just a few weeks ago.

The magnitude of the drop-off is steep given that Intel couldn't even make it to its Dec. 4 conference call to update its guidance. The damage: Intel expects fourth quarter revenue to be $9 billion, give or take $300 million or so. For perspective, Intel's revenue projection is in line with the sales tally from the first and second quarters of 2007. Historically, the fourth quarter is Intel's strongest. Intel had projected revenue of $10.1 billion to $10.9 billion just a month ago. That guidance was also lower than Wall Street estimated.

In a statement, Intel said:

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 reaction in after-hours trading was swift and Intel careened through its 52-week low of  $13.37. Just as an aside: You have to wonder if someone was tipped off. Check out that huge block of shares that was sold just before the market closed (click to enlarge):

Meanwhile, gross margins are expected to be about 55 percent in the fourth quarter, lower than the previous projection of 59 percent.

Add it up and it's clear that October was a hellish month for technology vendors. Best Buy earlier Wednesday said its business fell off of a demand cliff in October and added that it would be reducing inventory levels.

Intel's primary rival--AMD--holds an analyst meeting  Thursday. We'll see if AMD lowers its outlook also.