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Intel Tempers Revenue Forecast over Poor PC Outlook

Chipmaker Intel on Thursday warned investors that its first-quarter revenues could be off by about $1 billion due to lower-than-anticipated demand for business desktop PCs.

According to its revised Q1 forecast, Intel expects to earn revenue of $12.8 billion, give or take $300 million. That's down from its prior prediction of $13.7 billion, give or take $500 million.

"The change in revenue outlook is a result of weaker than expected demand for business desktop PCs and lower than expected inventory levels across the PC supply chain," Intel said in a press release. "The company believes the changes to demand and inventory patterns are caused by lower than expected Windows XP refresh in small and medium business and increasingly challenging macroeconomic and currency conditions, particularly in Europe."

Intel's revised forecast stoked fears that PC sales may remain weak until Microsoft ships its new Windows 10 operating system. Windows 10 is expected to become generally available sometime this fall.

Speaking to Reuters, Summit Research analyst Srini Sundararajan said that businesses and consumers are taking an "if it ain't broke, don't fix it" attitude to their old PCs. However, with Windows 10 waiting in the wings, many PC buyers are likely putting off upgrades, as well. As research by Redmond magazine and others is showing, many users plan to upgrade to Windows 10 and are awaiting the new hardware in the pipeline supporting the OS.

BlueFin Research Partners is forecasting about 76 million PCs will ship in Q1, a decline of 8 to 9 percent from Q4 2014, Reuters reported.

Besides flat PC demand, Intel also cited economic conditions in Europe as a factor in its revenue shortfall. According to various reports, those conditions have led to an increase in PC prices in Europe, which has impacted demand.

Intel's datacenter business forecast remains unchanged, the company said.

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.

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