Intel Lowers Third-Quarter Expectations

Chipmaker Intel Corp. (Santa Clara, Calif.) expects third-quarter revenue to fall between $8.3 billion and $8.6 billion, lower than the previous guidance for revenue from $8.6 billion to $9.2 billion.

Worldwide demand for Intel Architecture products is below previous expectations driven by lower than expected end demand, along with customer reductions in component inventory levels. Moreover, communications revenue is weaker than anticipated primarily due to lower than expected growth in flash memory shipments.

Intel now expects third-quarter gross margin to hover around 58 percent, compared to 60 percent expected previously. 2004 year gross margin is projected at 58 to 60 percent, as compared to 60 percent previously.

Spending for the third quarter is now expected to be approximately $2.4 billion, below the previous expectation of $2.5 billion. The tax rate for the third quarter is now projected to be 29.5 percent, below the previous expectation of 31 percent, reflecting the expectation that a higher percentage of profits will be generated in lower-tax jurisdictions.