Intel said it now expects sales to be flat or a percentage point or two above or below the $8.7 billion it recorded last quarter.
In its release, Intel said "recent large cancellations by customers worldwide" were responsible for the shortfall.
Intel (intc) shares closed up 56 cents to $32.31 ahead of the warning before being halted in after-hours trading.
First Call Corp. consensus expects Intel to earn 42 cents a share in the quarter.
The warning should come as no surprise considering most major PC makers have already issued profit warnings detailing the demise of the consumer PC market this quarter.
In fact, on Nov. 30 Lehman Brothers analyst Dan Niles predicted Intel would have difficulty meeting analysts' sales estimates.
At the time, Niles cut Intel from a "buy" rating to "outperform" and said the chip maker would have to "stretch" to even meet its lowered guidance for the fourth quarter.
"We believe that even though Intel gave conservative revenue growth guidance of 4 (percent) to 8 percent quarter over quarter, that this is certainly not in the bag and that Intel is being very aggressive to try and meet this guidance," he said in a research note.
Niles added that a 5 percent sequential sales decline was possible.
"We had originally hoped we could see a surge pre-Thanksgiving or great sell-through during Thanksgiving, but neither seems to have been achieved," he said. "This makes us cautious on the potential for processor cancellations later in the quarter or a large drop in pricing."
Sure enough, Intel's not going to hit the already watered-down sales targets.
Interestingly, Intel said capital spending for 2000 is expected to come in around $6.5 billion, higher than the $6 billion it previously estimated.
Last quarter, it earned $2.9 billion, or 41 cents a share, on sales of $8.7 billion.
Its shares fell to a 52-week low of $31.25 earlier this week after peaking at $75.81 in March.
Twenty-three of the 31 analysts following the stock maintain either a "buy" or "strong buy" recommendation.
Analysts are forecasting a profit of $1.71 a share in fiscal 2001.