Intel trims sales forecast

Intel Corp., the world's biggest computer-chip maker, cut the top of its first-quarter sales forecast to $8.2 billion as Asian laptop makers pare orders for semiconductors.

Revenue in the quarter will be $8 billion to $8.2 billion, Santa Clara, Calif.-based Intel said in a statement. Intel narrowed its expected range from a January prediction of $7.9 billion to $8.5 billion.

"We're coming down to reality," said Jimmy Chang, an analyst with U.S. Trust in New York, which manages $81 billion, including 18.9 million Intel shares. He spoke before the report was released. "Expectations were so high coming into the quarter."

Demand for chips is at the "lower end" of what is typical in this period, Intel said. Laptop makers such as Compal Electronics Inc. have slowed their orders as customer demand subsided from the Christmas holidays. The announcement marked the first time in three quarters that chief executive Craig Barrett hasn't boosted predictions to the high end of estimates.

Shares of Intel fell 58 cents to $29.07 in extended trading after the announcement. The stock gained 61 cents to $29.65 in Nasdaq Stock Market composite trading and has dropped 7.5 percent this year.

Intel said its gross margin, or the percentage of sales left over after subtracting manufacturing costs, would be about 60 percent, leaving its January forecast unchanged.

Analysts expected sales of $8.27 billion, the average estimate of 28 analysts in a Thomson Financial survey. Intel last year had first-quarter revenue of $6.75 billion.

Notebook shipments by Taiwanese manufacturers will probably fall 13 percent in the first quarter from the fourth period, more than double the average annual drop of about 5 percent, J.P. Morgan Chase & Co. analyst Christopher Danely wrote in a note to clients this week.

The laptop chip shortfall likely will be confined to this period, analysts including Banc of America Securities' John Lau said. Intel will make up for it during the rest of the year, as consumer demand combined with information-technology equipment purchases by companies boost sales.

Intel also expects higher profit due to new manufacturing pro. The company last month said it began shipping a new desktop computer processor, code-named Prescott, made with thinner wires.

Making chips with thinner wires cuts manufacturing costs by as much as a third because engineers can fit more chips on a single silicon wafer. Information also moves faster on smaller circuits, boosting semiconductor performance.

A new notebook processor called Dothan, also made with 90-nanometer wires, will be introduced next quarter, Intel has said.