NEW YORK (Reuters) - U.S. technology shares slumped on Thursday morning after Intel Corp (INTC.O) slashed its revenue forecast, in the latest sign of falling global demand for computers and other electronic products.
Several analysts lowered their price targets on Intel and other tech companies, after the biggest maker of chips for personal computers said it expects fourth-quarter revenue of $9 billion, plus or minus $300 million.
That was much worse than Intel’s October forecast of $10.1 billion to $10.9 billion, and far short of the average analyst estimate of $10.3 billion according to Reuters Estimates.
The warning weighed on the entire tech sector, with shares of PC maker Dell Inc DELL.O falling 4.0 percent to $10.08, and software giant Microsoft Corp (MSFT.O) down 3.0 percent to $19.69. The Nasdaq composite .IXIC fell around 1 percent.
Shares of Intel itself fell 1.11 percent to $13.37 as analysts said that while the chipmaker’s short-term outlook was weak, its long-term prospects are still good.
Citigroup analyst Glen Yeung lowered his price target on the shares to $17 from $20.
“We note that the combination of 1) weak demand, 2) inventory reduction by customers, and 3) impaired credit of distributors is conspiring to create this particularly negative environment,” he said in a research note. But he also stood by his recommendation that investors buy into the semiconductor sector’s declines.
Global Equities Research analyst Trip Chowdhry, on the other hand, said factors were not yet in place for the technology sector to recover.
“The bottoming will only occur when the spend in the IT space can recover. Oil prices at $25 a barrel would open up tech spending in the enterprise space,” he said.
Reporting by Ritsuko Ando, editing by Matthew Lewis