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Led by Intel, Chip Makers Revise Earlier Outlook
source: New York Times

Intel tried to accommodate this uncertainty by providing a wider-than-usual range in its fourth-quarter revenue forecast. But chip sales dropped so precipitously that the company was forced to revise the numbers before a planned midquarter update.

If Intel's fourth-quarter revenue comes in at the low end of its forecast, the 19 percent drop in sales would be the biggest since the fourth quarter of 2001, when sales dropped 20 percent.

The warnings from the large semiconductor players mean that consumer electronics and computer companies will probably have a difficult holiday season. Best Buy, the leading electronics retailer, offered its own bleak forecast Wednesday, and its rival, Circuit City Stores, filed for bankruptcy protection Monday.

"People don't have any money left to buy cool gadgets," said Trip Chowdhry, an analyst at Global Equities Research, adding that the housing debacle has drained consumer budgets.

In the next few months, Mr. Chowdhry expects a spate of job cuts in Silicon Valley.

"It will be almost across the board in the region," he said. "Three percent to 10 percent of the people will get laid off."