Chip maker blames Europe for sales alert

Intel, the world's biggest PC chip maker, blamed weakness in its European business when it warned that third-quarter sales growth would be less than market forecasts.

Intel, the world's biggest PC chip maker, blamed weakness in its European business when it warned that third-quarter sales growth would be less than market forecasts.

Intel's shares had tumbled 20 per cent to $48 ³/ ₄ by midday in New York as 210 million shares changed hands. Thursday night's revenues warning came after US markets closed.

A spokesman for Intel said: "Europe is the only area behind our expectations. The weakness stems from general economic issues." He declined to give details about particular European markets, specific product segments or the impact of euro weakness. In 1999, Europe accounted for 25 per cent of the company's total sales of $29.3bn (£20.5bn).

Intel now expects third-quarter sales to rise 3-5 per cent from the second quarter's $8.3bn. The company had not given atarget, but expectations had been higher. Gross profit margins are also expected to be lower.

Figures from research group Gartner Data Quest show growth of PC demand in Europe is lagging behind worldwide PC growth. But part of Intel's shortfall stems from market gains by rival Advanced Micro Devices.

The far-reaching impact of Intel's statement on world markets stems from its history of consistently beating forecasts.Some two-thirds of US mutual funds hold Intel shares.