Intel’s shock warning sounds alarm for tech sector

Chip giant Intel Corp cut its fourth-quarter revenue forecast by about 14 percent 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 impact of Intel's warning was exacerbated by weak outlooks from two other chip industry heavyweights, Applied Materials Inc and National Semiconductor Corp.
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.
Intel said the PC industry supply chain was aggressively reducing component inventories. The company makes about 80 percent of the world's microprocessors, which power PCs.
American Technology Research analyst Doug Freedman said Intel's warning raised questions over how far along into the downturn the industry is, and how much of the bad news is now out of the way.
"The normal pattern is for Intel to be down 10 to 12 percent in the March quarter and now we are seeing that type of behavior in the December quarter," he said. "So the real question that investors have … is what is March going to look like off of this new number."