Intel Corp. completed a round of cuts in the prices of its processors yesterday, reducing the price of its flagship Pentium 4 desktop processors, its mobile Pentium 4-M processors, its desktop and mobile Celeron processors, and its Xeon processors for workstations and low-end servers.
At the same time, financial analyst firms warned of slower-than-expected sales and revised their guidance downward for Intel's third-quarter numbers.
The price cuts had been widely expected after Intel last week introducedseveral new desktop Pentium 4 processors at clock speeds up to 2.8 GHz. Intel at the time cut the price of its previous clock-speed leader, the 2.53-GHz Pentium 4, and needed to cut the prices of slower Pentium 4s to bring the slower chips in line with the high-end prices.
The 2.4-GHz Pentium 4 now costs $193 in 1,000-unit quantities, down from $400, a decrease of 52%. The 2.26- and 2.2-GHz chips also now cost $193, down from $241. The 2-GHz chip costs $163, down from $193; and the 1.8-GHz chip costs $143, down from $163.
Intel's fastest mobile processor, the 2-GHz Pentium 4-M, now costs 45% less at $348, down from $637. The 1.9-GHz Pentium 4-M is down to $241, a drop of 40%; the 1.8-GHz chip now costs $198, down 43%; and the 1.7-GHz chip now costs $171, down 29%.
The company's desktop Celeron processors were reduced by an average of 16.75%, and its fastest mobile Celeron processor, at 1.5 GHz, was cut 44% to $96. Lower-end Xeon processors were cut by an average of 16.67%. High-end Xeon and Itanium processors for servers weren't affected by the latest round of price cuts.
The price cuts and new processors were expected to stimulate demand for PCs featuring the new processors, but that strategy has continued to be derailed by a sputtering economy.
Financial analyst firm Investec Inc. in New York CIty, said today that it's lowering revenue and earnings-per-share estimates for Intel's third quarter and fiscal year, based on a survey of retail consumer electronics stores that indicated a weaker back-to-school market. The back-to-school market is the second most important season for PC and processor sales, with the fourth-quarter holiday season carrying the most weight.
Investec now expects Intel to earn $6.5 billion in the third quarter, down from its previous estimates of $6.7 billion. Earnings for the third quarter will now be 12 cents per share, down from 13 cents, Investec said. The company also lowered expectations for Intel's 2002 and 2003 full-year results.
Analysts surveyed by Thomson Financial/First Call in Bostonexpect Intel to earn 13 cents per share in the third quarter.
Intel provided its own guidance for third-quarter revenue of between $6.3 billion and $6.9 billion when it announced its second-quarter results.
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