Soft Europe torpedoes Intel forecasts

Sells fewer high-end CPUs than expected

Intel blamed soft demand in Europe for a revised revenue guidance for Q2. The company now expects sales of $6.2bn-$6.5bn, compared with its previous forecasts of $6.4bn-$7bn, for the Q which ends June 29.

Worse, gross margins are expected to be 49 per cent (+ or - a couple of points), compared with the previous range of 53(+ or- etc.), "primarily due to the lower than expected revenue and product mix". The company is selling fewer high-end microprocessors than it had expected.

Lower revenues than forecast could mean stockpiles, which in turn would mean deck-clearing price cuts coming down the line.

Also Intel expects to write off $230m in intangibles associated mostly with the purchase of Xircom WLAN card business. Previously, it was going to write off $115m.

It says the enterprise, mobile, and communications businesses are performing to expectation. And it continues to expect a seasonal uptick in the traditionally stronger second half of the year. ®