We don’t usually see Intel miss its revenue targets, but apparently, that’s what’s going to happen this quarter. The chipmaker announced this morning that it’s lowered its official forecast for both revenue and gross margin.
Intel now expects third-quarter revenue of $13.2 billion, below the previously anticipated range of $13.8-14.8 billion. The company also says its gross margin will be 62% "plus or minus one percentage point," down from 63% "plus or minus a couple of percentage points" (translation: 61-63% instead of 61-65%).
What went wrong? Intel blames "weaker than expected demand in a challenging macroeconomic environment." It adds:
Relative to the prior forecast, the company is seeing customers reducing inventory in the supply chain versus the normal growth in third-quarter inventory; softness in the enterprise PC market segment; and slowing emerging market demand. The data center business is meeting expectations.
Intel shares slumped by a few points on the news, but it doesn’t sound like the Street is entirely surprised. Cody Acree, an analyst for Williams Financial Group, told Reuters this morning, "Everybody up and down the food chain has been saying this. Intel was one of the last hold-outs . . . The assumption was not whether they’d preannounce but to what degree."