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Intel to miss Q4 targets

Cancelled orders and sluggish demand

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Intel today warned sales in the fourth quarter would be lower than expected.

The chip giant issued a statement after the market closed saying that due to slowing demand for PCs, it would not hit the expected four to eight per cent growth on Q3.

"As a result of recent large cancellations by customers worldwide, the company now expects revenue for the fourth quarter to be flat, plus or minus a couple of percentage points, with third quarter revenue of $8.7 billion," the California company added.

Intel said it expected gross margins for the fourth quarter to stay at around 63 per cent.

The announcement followed fellow chipmaker National Semiconductor today topping revised estimates for the second quarter, but also warning that sales would fall in its next quarter.

The chipmaker reported $106.7 million net income for the period ended November 26, compared to $92 million the previous year. Sales rose to $595 million from $514 million. The announcement followed a profit warning in October.

But NatSemi said it saw sales dipping by as much as ten per cent in the third quarter from the second, largely due to inventory adjustments in the distribution channel and seasonal weaknesses in the PC and peripherals market. Gross margins may drop to between 47 per cent and 48 per cent from the company's current 50 per cent.

Brian Halla, NatSemi president and CEO, said the company had seen a "respectable quarter...despite the impact of inventory corrections by some of our customers in the mobile phone market and slower demand in the PC market."

The chipmaker said it expected market conditions to pick up at the end of the calendar year as its wireless handset customers and distributors met their year-end inventory targets.

"As a result...we are now expecting overall sales for the current fiscal year, which ends May 27, 2001, to improve in the range of 10 percent over last year," said Halla.

The company is also aiming for gross margins of 50 percent for the full fiscal year.

Computer makers Gateway and Apple have both cut sales targets for their fourth and first fiscal quarters respectively in the past week. ®

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