Chip giant Intel Corp cut its fourth-quarter revenue forecast by about 14 per cent citing weak demand across the world and in all its products, indicating the economic crisis is set to hurt computer sales in the holiday season and beyond.
The shock warning hammered tech shares, which had already tumbled, with Intel plunging 7 percent to a 12-year low and Microsoft Corp falling 2 per cent to a 10-1/2 year low.
"For revenue to be that far down sequentially, it means consumers have basically shut down for the holidays," said Charter Equity Research analyst John Dryden. Intel's third-quarter revenue was $10.2 billion.
"It's so far below what they had expected ... The company had outlined weakness in enterprise but not the consumer yet," Dryden said.
The impact of Intel's warning was exacerbated by weak outlooks from two other chip industry heavyweights, Applied Materials Inc and National Semiconductor Corp.
"The last six weeks of turmoil in the financial markets is unprecedented. The weakening global economy will have significant impact on all of Applied's businesses," chief executive Mike Splinter said during a conference call.
The early warning was worse than many had feared, fueling worries that the slump in global technology spending was sharper than anticipated and could last longer than previously predicted.
Taunya Sell, analyst at Wells Fargo division Ragen MacKenzie, said analysts are going to have to adjust their 2009 forecasts "to reflect the new reality". "Obviously this has implications for Microsoft in the PC market," Sell said. "Their business tracks PC shipments as well. I think this is affecting everyone, and those that say it's not will have to come to the altar in January."
The shock warning hammered tech shares, which had already tumbled, with Intel plunging 7 percent to a 12-year low and Microsoft Corp falling 2 per cent to a 10-1/2 year low.
"For revenue to be that far down sequentially, it means consumers have basically shut down for the holidays," said Charter Equity Research analyst John Dryden. Intel's third-quarter revenue was $10.2 billion.
"It's so far below what they had expected ... The company had outlined weakness in enterprise but not the consumer yet," Dryden said.
The impact of Intel's warning was exacerbated by weak outlooks from two other chip industry heavyweights, Applied Materials Inc and National Semiconductor Corp.
"The last six weeks of turmoil in the financial markets is unprecedented. The weakening global economy will have significant impact on all of Applied's businesses," chief executive Mike Splinter said during a conference call.
The early warning was worse than many had feared, fueling worries that the slump in global technology spending was sharper than anticipated and could last longer than previously predicted.
Taunya Sell, analyst at Wells Fargo division Ragen MacKenzie, said analysts are going to have to adjust their 2009 forecasts "to reflect the new reality". "Obviously this has implications for Microsoft in the PC market," Sell said. "Their business tracks PC shipments as well. I think this is affecting everyone, and those that say it's not will have to come to the altar in January."