Intel lowers guidance for Q3 amid slow processor sales

Intel said its Q3 revenue will be slightly below the midpoint of the previous guidance of $6.3-to-$6.9 billion, and within a narrower range of $6.3-to-$6.7 billion.

The company disclosed its original Q3 guidance in June, when it reported a profit of $446 million, or $0.07 a share, on sales of $6.3 billion in the second quarter of 2002. In the third quarter of last year, it reported a profit of $106 million, or $0.02 a share, on sales of $6.5 billion.

The company blamed the new Q3 forecast on microprocessor unit sales, which "are trending toward the lower end of the normal seasonal pattern," according to Santa Clara-based Intel.

Amid the ongoing slowdown in the PC market, Intel last weekend cut the price of its processors by up to 52%--a move that impacts the company's bottom line. But Intel said the latest price cuts were made to clear out older chips in the line following the firm's introduction of new higher speed 2.6-GHz to 2.8-GHz processors last week (see Sept. 3 story ).

Intel painted a mixed picture on the processor front. "We believe our microprocessor shipments will be up quarter-over-quarter," said Paul Otellini, president and chief operating officer of Intel. "They are up at the low-end of the seasonal uptick," Otellini told analysts in a conference call here today.

The company faces other problems as well. "The company's flash business is in line with expectations, while demand for other communications products remains soft," according to a statement released here today.

In fact, Intel's communications business remains in the red. "Profitability will elude us until the business recovers," Otellini said.

Another troublesome sign is Japan and Asia-Pacific in terms of product demand, he said. "Asia-Pacific and Japan both were slightly below than we expected," he said. The European and U.S. markets "were about where we expected," he added.