Intel sells off following Q4 revenue guidance

Intel blamed the weak quarter on two different problems that it is dealing with. The first is a weakening of end user demand. This is the demand from consumers as well as companies that buy computers that feature Intel chips. This should not be much a surprise as everyone, individuals and companies alike, have been tightening spending where ever possible over the past few months. The second area of weakness for Intel comes from computer makers that are slowing down production in order to ease growing computer inventories.

We also got a better idea of what the company's gross margin is going to look like for the fourth quarter. Earlier guidance had been somewhere around 59%, but today the company lowered that down to 55%, give or take a couple percentage points.

Just how long Intel is going to be forced to deal with weak demand remains to be seen, but one analyst, JoAnne Feeney, with FTN Midwest Securities Corp., warns that the light at the end of the tunnel could be a long way away. Feeney stated that she does not see things turning around any time soon, and that she doesn't see any signs of a bottom yet, and we could be waiting until the second or third quarter before things start to reverse.

Intel is due to report official fourth quarter numbers on the 15th of this month, so we will have to wait and see just how accurate today's guidance really is.

Today's news put the brakes on the stock, which has been making a nice recovery over the past month, after falling sharply during the fourth quarter of last year. Let's close by taking a look at how the stock has performed over the past twelve months:


Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the online investment advisory service Investor's Observer.