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Intel CEO says too early to see economic crisis impact

SAN FRANCISCO, Oct 14 (Reuters) - Intel Corp INTC.O Chief Executive Paul Otellini's said on Tuesday that it was too soon to know the extent of the global economic crisis, with some customers worried and others seeing little to no impact.

“The financial crisis is creating some signs of stress that may impact our business, but the extent of that is difficult to quantify,” Otellini told investors on a conference call as he discussed Intel’s better-than-expected quarterly earnings report.

Intel, which supplies the chips that run roughly four out of every five of the world’s personal computers, said it had yet to see any order cancellations -- known in the industry as “pull-ins” -- from PC makers worried by weak demand.

Wall Street analysts repeatedly probed but Otellini and Chief Financial Officer Stacy Smith stood firm and refused to speculate in a world that has seen record gyrations in the stock market in the last two weeks.

Executives said sales of chips that run powerful business computers known as servers was weak relative to what the company had expected, but that it was too early to say how this pattern would play out in the fourth quarter. But downplaying the risk of the Wall Street crisis to its business, Intel said financial firms buy only one in six of its server chips.

Smith alluded that in less uncertain times the strength of the company’s third-quarter results would have encouraged the company to provide a bullish outlook for the fourth quarter -- traditionally its seasonally strongest sales period.

“The issues we have been talking about -- if you just look at Q3 (third quarter) you would expect a strong Q4 (fourth quarter) -- seasonal or maybe a little better,” he said.

Intel gave itself more running room in its predictions for the last quarter of this year and stayed away from venturing into predictions for next year.

The world’s biggest computer chipmaker said on Tuesday it expects revenue in the fourth quarter of $10.1 billion to $10.9 billion. The midpoint of that range, $10.5 billion, was around 2 percentage points lower than Wall Street had hoped.

“Right now as we look at the fourth quarter, we need to see the impact of what is roiling through the credit markets and that’s what is giving us the higher range of potential outcomes for revenue in the fourth quarter,” Smith said. “We have got to watch that and then we will have a better sense for 2009.”

The best Intel would promise is that it will hold an update on Dec. 4 of its business midway through the fourth quarter -- six weeks before reporting its full, year-end results in January.

Otellini did say sales could take a continuing hit from big business as corporate budget cutters scale back computer purchases. “We expect the corporate segment to continue to show some softness as IT (information technology) spending gets rationalized in this macro environment,” he said. (Reporting by David Lawsky and Eric Auchard; Editing by Bernard Orr)

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