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Wed, 07 Jan 2009 Weak demand causes Intel to cut Q4 forecast

Intel says it will take a much higher loss on other equity investments than expected

Jeremy Kirk

Intel expects fourth-quarter revenue for fiscal 2008 to fall 23 per cent compared to a year prior due to weaker demand for computer processors, the company said on Wednesday.

The chip maker expects fourth-quarter revenue of $8.2 billion, down 20 per cent compared to the previous quarter.

Intel revised its fourth-quarter expectations ahead of its scheduled earnings announcement on 15 January.

Intel's grim news comes as technology companies are feeling the full brunt of the global economic crisis, as demand for software and hardware slows.

Intel also said it will take a much higher loss on other equity investments than it expected.

The company will note a non-cash charge in the fourth quarter of $950 million related to its investment in Clearwire, which has a WiMax mobile broadband network.

Intel was one of five companies that invested $3.2 billion last year in Clearwire along with Google, Comcast, Time Warner Cable and Bright House Networks.

Clearwire's stock hit a peak of more than $17 per share in February 2008, but has steadily fallen.

It traded on Wednesday around $5.09 a share.

Overall, Intel expects to lose between $1.1 billion and $1.2 billion on equity investments rather than the $50 million it previously expected to lose.

Intel said it expects to have spent about $2.6 billion on research and development rather than $2.8 billion. Restructuring and asset impairment charges will be around $250 million, the same as the company's previous guidance.

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