Intel Sets A Gloomy Tone

Intel Sets A Gloomy Tone

Weak demand is further chipping away at Intel’s microchip business.

Early Wednesday, Intel (nasdaq: INTC - news - people ) announced preliminary fourth-quarter sales below its previously-announced estimates as the sale of microprocessors used in personal computers and inventory reductions fell as a consequence of weakening global demand. The Santa Clara, Calif.-based company said it now expected its top line figure to be approximately $8.2 billion, down 23.4% from year-ago sales of $10.7 billion, and below analyst estimates for sales of $8.7 billion.

Shares in Intel fell 4.6%, or 71 cents, to $14.66, in morning trading in New York.

"Clearly we are going to be in an ugly period for corporate earnings. That shouldn't be a surprise to anybody," said Tim Ghriskey, chief investment officer at Solaris Asset Management. "I think we are going to see announcements like this throughout the earnings season and especially this preannouncement period.”

In November, Intel had forecast sales of $9.0 billion, plus or minus $300.0 million, marked down from an even earlier forecast of $10.1 billion to $10.9 billion. Intel Chairman Craig Barrett had said in late November that the revision was final. (Watch "Intel Warns, Stock Drops.")

Intel also said it would post a fourth-quarter impairment charge of approximately $950.0 million related to its investment in Clearwire (nasdaq: CLWR - news - people ), a wireless broadband network operator which it has worked with in the development of the next generation of wireless data technology since 2006. (See “Intel's WiMax Bet.”) Intel expects the net loss from equity investments to be between $1.1 billion and $1.2 billion, compared with prior estimates of a loss of $50.0 million.

Reuters contributed to this article.