First time in two yrs, Intel forecasts a fall in sales

PALO ALTO (CALIFORNIA): Intel on Thursday said third-quarter revenues will fall below forecasts, and it now sees a rise of only about 3 per cent to 5 per cent from second quarter sales of $8.3 billion. The sales warning – Intel’s first in more than two years – sent its stock plunging 21 per cent in after-hours trading and dragged down other high-tech stocks. The Nasdaq Composite Index, the index for technology stocks, closed 69 points down on Thursday. The warning also triggered a fresh downslide on Southeast Asian stock markets, particularly Hong Kong, Japan and Singapore.

The announcement by the world’s largest maker of computer chips follows recent speculation that global demand for microprocessors and personal computers is waning. The third quarter is typically the slowest for the chip and PC industry, and Intel tends to make a large portion of its quarterly sales in September. But not this time.

The slack demand also suggests that the typical back-to-school season may not be getting underway as quickly as expected. On top of that, some analysts said that Microsoft Corp’s Windows 2000 has not been selling as briskly as anticipated.

“Growth rates in Europe in the third quarter dropped to single digits from 20 per cent or more earlier,†said analyst Ashok Kumar at US Bancorp Piper Jaffray. “Windows 2000 has been, well, how many ways do you spell dud? As such, there’s no compelling reason for businesses to upgrade.â€