Intel warns of revenue dip

Intel's showing at CES was overshadowed this week with the news that the chip giant was predicting a massive 23 percent drop in revenue.

CNet reports that Intel's fourth quarter earnings report contains an $8.2 billion revenue expectation, which is a massive 23 percent down on year-earlier figures, and 20 percent lower than third quarter revenue.

With industry analysts claiming a 26 percent decline on consumer electronics sales year-on-year, it's not hard to see why Intel is feeling the pinch. The current depressed economic climate worldwide is slowing spending, which is in turn decreasing demand – leading the channel to be filled with excess inventory that has to be discounted ever steeper. The excess inventory leads to fewer orders from the chip makers themselves, and it's this slowdown in purchasing that is causing Intel some significant heartache this quarter.

The company is far from on the blocks, of course – although the revenue prediction is pretty dire, it's still a good-sized turnover. Increased interest in the netbook market and the success therein of Intel's low-power Atom range will be helping the company, but reduced spending on high-end products such as systems based around its new i7 processor will be taking such gains away again. It's clear that while Intel isn't going to be closing its doors any time soon, there's definitely going to be some belt tightening if things don't improve in the next few financial quarters.

Do you believe that Intel is well positioned to build its revenue back up, or is it missing something critical from its chip line-up? Share your thoughts over in the forums.