Intel Corp lowered its expectations for Q4 sales, gross margin, and spending, sending its stock to a new 12 year low in Wednesday after hours trading.

In its post closing bell statement, Intel said it now expects revenues to fall 9% to15% sequentially to $9 billion, plus or minus $300 million, lower than the MPU maker's previous expectation calling for growth down 1% to up 7% sequentially and revenue between $10.1 billion and $10.9 billion.

Intel said revenue is being affected by "significantly weaker than expected" demand in all geographies and market segments. The company also noted that the PC supply chain is aggressively reducing component inventories.

Analysts had warned Intel would reduce its Q4 guidance earlier this week. In addition to noting weak demand from the PC market, analysts pointed out that Intel forecasted for Q4 early in the earnings season when it reported on Q3 financials in mid-October and reminded that much has changed in the market since then because of the financial crisis' impact.

"Intel's updated guidance reflects meaningfully lower-than-anticipated global demand in all market segments (desktops, notebooks, servers, chipsets). The company also said that distributors are continuing to lower internal inventories, we think below sustainable levels as these distributors convert inventory into cash," Craig Berger, a semiconductor industry analyst with FBR Capital Markets, said in a report this morning.

Intel further reported that gross margin is now 55% plus or minus a couple of points, lower than the previous expectation of 59% plus or minus a couple of points. R&D and MG&A (marketing, general, and administrative) spending is expected to be approximately $2.8 billion in the December quarter, lower than the previous expectation of approximately $2.9 billion, primarily due to lower revenue- and profit-related spending. For the full year, Intel projected spending will be approximately $11.4 billion, lower than the previous expectation of approximately $11.5 billion.

The revised guidance brought a notable change in tone from Wall Street in post trading hours Wednesday. Intel had been celebrated after its Q3 earnings report delivered the company's best September quarter revenue in its history at $10.2 billion. At the time, CEO Paul Otellini described inventories as in "reasonable shape" and reported healthy interest in notebooks and netbooks, which its Atom line serves. That news sent the company's stock, INTC, immediately up in trading.

However, on the revised outlook, shares of INTC fell as low as $12.36 in after-hours trading Wednesday, marking the stock's lowest point since September 1996. The stock closed at $13.52 Wednesday afternoon, before Intel stated the revised guidance. 

INTC had fallen to $13.31 at 9:32 eastern this morning. However, INTC rebounded during the day, as did most stock's on the Dow's rise, to close at $14.43, up 6.73% for the day.*

By: DocMemory
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