Intel's third quarter is expected to be weak due to bloated PC inventories, lackluster ultrabook sales and buyers' love for tablets and smartphones. Meanwhile, the fourth quarter for Intel will be a wild card based on the Windows 8 launch Oct. 26.
Simply put, expectations for Intel's financial performance are pretty low.
Intel is expected to report third quarter earnings of 49 cents a share on revenue of $13.23 billion. Wall Street estimates were cut following the company's revenue warning.
Since that warning the following has unfolded:
Here's a look at the third quarter wild-cards and unknowns for the fourth quarter.
Did a September PC build cycle help out Intel? Wells Fargo analyst David Wong said that Intel filled out its product lineup and that lead to contract equipment manufacturers building PCs. "We are hopeful that the build momentum of the month of September will continue through October up to the launch of Windows 8," said Wong.
More: Intel's Moore's Law may ultimately meet economic limits
Will Windows 8 be a hit? Windows 8 is launching in just a few days and the hardware picture is muddled with various form factors. Piper Jaffray analyst Auguste Gus Richard noted that any upside surprise from Windows 8 will be a boon to Intel.
OEMs have had no idea what to build for the holidays and have cut back on inventory. Thus, any holiday PC demand will quickly result in increased demand for Intel
--Auguste Gus Richard, Piper Jaffray analyst.
Has the economy derailed server spending? By most counts, server demand has been weak despite new Intel chips. The data center has been Intel's rock amid dicey consumer spending. Deutsche Bank analyst Ross Seymore said that Intel is picking up data center share in servers, storage and networking processors.
Will ultrabooks sell? Ultrabook sales have been disappointing, but Windows 8 and Intel's chips may boost demand. One wrinkle worth noting: In all my tests of Windows 8 it's clear that you need a touch enabled laptop screen. That fact may result in more sales.
Can Intel move tablets? Intel launched its Clover Trail tablet chips, but it's unclear whether Windows 8 tablets will sell well.
Emerging market PC demand. Intel may have trouble with PC demand in developed markets, but emerging regions such as Asia-Pacific could pick up the slack. These emerging markets are often dominated by so-called white box PCs, which aren't picked up by Gartner and IDC data.
Average selling prices are another key issue. Intel may have to cut prices to pare down inventory levels.
Intel could cut capital spending for 2013. Intel said its capital expenses will be below $12.1 billion and $12.9 billion. Why? Intel will reuse equipment. Should this trend continue, Intel's profit margins will look better in 2013.