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Global PC meltdown hits Intel hard

Internet plumbing is the only silver lining

Chip giant Intel issued its second profit warning of the calendar year on Thursday, saying its fourth-quarter revenue will be below expectations.

Like many other companies in the IT industry that have already issued similar warnings, Intel blamed a slowdown in demand for PCs caused by a softening in the global economy.

Profit warnings from both PC vendors and other businesses related to the PC industry have been flying fast and furious this past week - first Gateway, then 3Com, followed by Apple and yesterday, Motorola.

According to Intel senior vice president Bryant that the processor manufacturer has been affected across all geographies, with a downturn in demand hitting almost all of the company's products. "It's quite consistent, it's not any one customer, country or product, everything is down consistently," he said.

Previously, the chip giant had predicted fourth quarter revenue would be four percent to eight percent above that recorded in the third quarter.

The chip maker grew concerned about demand over the past two to three weeks as order cancellations began to come in from its customers, according to Sean Maloney, an Intel senior vice president, and director of its sales and marketing group.

While both consumer and business PC sales have fallen, the server market remains "very strong," Maloney said. This is despite a slowdown in demand for servers among dotcoms.

Instead, Intel is seeing traditional bricks and mortar companies moving increasingly towards e-business, resulting in more sales of servers containing Intel processors.

Bryant admitted that the year 2000 has turned out to be a "strange" year for Intel. "We had a strong first half and a weak second half," he said. "That's not supposed to happen" based on historical trends that predict exactly the reverse situation.


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