Intel had expected people to replace desktop PCs running on outdated Microsoft operating systems, but they didn't leading to weak demand for its chips. Things had not been going well in Europe either.
Intel said it expected first-quarter revenue of $12.8 billion, plus or minus $300 million - about 7 percent lower than its earlier forecast of $13.7 billion, plus or minus $500 million. When Microsoft wound down support for its Windows XP operating system last April, Intel had expected a bounce in demand from small- and medium-sized businesses. But this has not happened.
According to BlueFin Research Partners, 75 million-76 million PCs will be shipped worldwide in the first quarter, a decline of 8-9 percent from the preceding quarter. Intel has been trying to offset the impact of slower PC upgrades by making chips for devices such as "2-in-1s", which function as both laptop and tablet.
Intel said the mid-point of its gross margin range would remain at 60 percent, plus or minus a couple of percentage points. Intel's shares were down 4.8 percent at $30.76 in late afternoon trading on the Nasdaq. Microsoft's shares were down 2.4 percent at $41.