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Intel figures take kicking in Q4

PCs to blame

channel

Chip maker Intel said before Wall Street opened this morning that its sales in the fourth quarter of 2008 were going to be even worse than the company had already warned they would be. The company also said that it was writing off a chunk of its investment in WiMax service provider Clearwire, which will also whack its books for last year.

The drop off in sales in Q4 is not unexpected, given the state of the global economy. Corporations and consumers alike are cutting back on spending, and being the dominant supplier of processors for PCs and servers in the world means Intel gets hit hard when the economy goes off a cliff. In a statement, Intel said that its sales fell because of "further weakness in end demand and inventory reductions by its customers in the global PC supply chain".

With new "Nehalem" server processors around the corner at the end of this quarter, it is likely that server makers were also curtailing the acquisition of older Xeon processors and related chipsets and motherboards from Intel, too.

Intel is now projecting that its fourth quarter sales will be $8.2bn, which is down 23 per cent from the year-ago quarter and down 20 per cent from its third quarter. Back in November, Intel had revised its guidance for the quarter downward to somewhere between $8.7bn and $9.3bn in sales.

Making matters worse, Intel says that its investment in WiMax service provider Clearwire has been hit by that company's declining stock price, and that it will take a non-cash charge to earnings in the fourth quarter of $950m. Intel was projecting back in November that it would have a $50m loss from equity investments and interest, and now it says that loss will grow between $1.1bn and $1.2bn.

Intel reports its financial results for the fourth quarter on January 15. ®

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