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One disaster in the hand is worth two chirping Cassandras in the bush.
Well, the doomsayers were proven right today, as Intel officially lowered its revenue guidance for the quarter in progress.
The company tightened its revenue estimates and lowered the midpoint by 7.7%. The new target is roughly $13.2 billion, which is below the bottom end of the original guidance range.
The company isn't cutting operating expenses in response to the negative trends, but older manufacturing gear is being repurposed to a greater degree than Intel had planned. So the soft sales should affect the bottom line, even as Intel fights to preserve its cash flows.
Management blames most of the miss on macroeconomic troubles, but also notes that there are more specific issues afoot. "Relative to the prior forecast, the company is seeing customers reducing inventory in the supply chain versus the normal growth in third-quarter inventory; softness in the enterprise PC market segment; and slowing emerging market demand," say Intel's press materials.
As Intel pointed out, the third quarter is usually a strong period for PC processor sales as system builders gear up for the coming holiday rush. In addition, you might have expected even bigger chip orders this time since Microsoft
But Intel's bad news flies in the face of such optimistic tea leaf readings. Instead, the guidance action underlines the gloomy market accounts seen in recent quarterly reports by Dell
Maybe consumers aren't clamoring for Windows 8 the way Redmond and Intel were hoping for, or perhaps the Dells and HPs of the world are holding back on their system builds due to Microsoft's treasonous introduction of the Surface tablet. Only time will tell, but either way, the WinTel partnership isn't the cash machine it once was.
The Fool has created in-depth premium reports on both Intel and Microsoft. Today's market-moving news will most certainly change our analyses, but never fear -- the reports include a full year of totally free updates so you can get the latest scoop on heavy bulletins like this one. Boost your knowledge of Intel right here, and dive deeper into Microsoft here.
Fool contributor Anders Bylund holds no position in any of the companies mentioned. Check out Anders' holdings and bio, or follow him on Twitter and Google+. The Motley Fool owns shares of Intel, Apple, and Microsoft. Motley Fool newsletter services have recommended buying shares of Intel, Apple, and Microsoft. Motley Fool newsletter services have also recommended creating a synthetic covered call position in Microsoft and a bull call spread position in Apple. The Motley Fool has a disclosure policy.
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