INDUSTRY

Intel issued a warning today that 4Q revenue will come in below expectations. It is expected to be between $8.7 billion and $9.1 billion, roughly $500 million lower than estimates the company issued in January. Intel is facing steep competition from its smaller rival Advanced Micro Devices. AMD has been making steady market share gains. The Opteron chip has lifted AMD's share of the x86 server processor market from zero a few years ago to 14.3 percent in the fourth quarter of 2005, according to IDC. Several customers have installed Opteron servers, and the latest is Google, according to Mark Edelstone at Morgan Stanley. Almost all of that came at Intel's expense. Analysts were expecting it to report sales of $9.42 billion, according to a survey by Thomson Financial. The reduction was one of the sharpest warnings from the company since 2001, when the whole tech industry was sinking into recession. In its warning, Intel did not specify how much of its shortfall was attributed to weak demand versus market share loss. The company, following its usual practice, also did not provide a forecast for earnings, which analysts had expected to be 27 cents per share. It did say it expects gross margins to be squeezed by the lower revenue. However, expenses also will be lower than forecast due to lower revenue and profit-related spending.