€68bn wiped off value of Intel on revenue warning

More than $60 billion (€68 billion) was wiped off the value of computer chip manufacturer Intel on the New York market after the group said that it expected third-quarter revenue growth of only 3 to 5 per cent above its second-quarter $8.3 billion.

Intel employs 4,400 people at its chip manufacturing plant in Leixlip, Co Kildare, and is one of the largest employers in the State. The market had been expecting second-quarter growth of between 9 and 12 per cent. Intel did not disclose an earnings forecast in its statement, which blamed weak European demand for the alert.

Weak demand for PCs in Europe will not lead to a scaling back at Intel's plant in Leixlip, a senior vice-president at the company said last night. Mr Sean Maloney, who directs the sales and marketing division, said the company had no plans to change its production schedule at the plant. He declined to comment on demand for PCs after the third quarter.

The warning from Intel, the world's biggest maker of the silicon chips which are installed in everything from personal computers to mobile phones, underscored investor worries about US corporate profits, especially in the high-profile technology sector.

The area has been a key driver behind a record expansion of the US economy and markets. Intel's warning follows recent speculation that global demand for microprocessors and personal computers is waning.

The third quarter is typically the slowest for the worldwide chip and PC industry and Intel tends to get a large portion of its quarterly sales in September. But not this time. "Growth rates in Europe in the third quarter dropped to single digits from 20 per cent or more earlier," said analyst Mr Ashok Kumar at US Bancorp Piper Jaffray.

"Windows 2000 has been, well, how many ways do you spell dud? As such, there's no compelling reason for businesses to upgrade."

From its overnight level of $61.48, Intel fell to a low of $46 in huge turnover before recovering later in the morning session as bargain-hunters snapped up stock.

At the close on Nasdaq last night, the shares were on $47.94 down $13.54 on the day.

Merrill Lynch, Deutsche Banc Alex Brown, Credit Suisse First Boston, Lehman Brothers, Salomon Smith Barney, Chase H&Q and PaineWebber all cut their outlooks for Intel results.