Intel has cut nearly $1 billion from its Q1 revenue forecasts as SMBs put off desktop upgrades.
Intel says it now expects to generate Q1 revenue of $12.8 billion (plus or minus $300 million), rather than its earlier forecast of $13.7 billion (plus or minus $500 million).
"The change in revenue outlook is a result of weaker than expected demand for business desktop PCs and lower than expected inventory levels across the PC supply chain," Intel said in a statement.
"The company believes the changes to demand and inventory patterns are caused by lower than expected Windows XP refresh in small and medium business and increasingly challenging macroeconomic and currency conditions, particularly in Europe."
"The company is forecasting the mid-point of the gross margin range to remain at 60 per cent, plus or minus a couple of percentage points, as lower PC unit volume is offset by higher platform average selling prices. Expectations for R&D and MG&A spending and depreciation in the first quarter remain unchanged."
The lack in these upgrades caused the chip maker’s shares to fall more than five per cent.
As well as the drop in demand for upgrades, global PC shipments are also expected to dip by about 4.9 per cent this year. The total volume of PCs expected to ship this year is 293.1 million.
Analyst IDC expects worldwide PC shipments to fall by 4.9 per cent in 2015 to 293.1 million PCs, a drop from the previous forecast of minus 3.3 per cent. However, growth projections for 2016 and 2017 were raised slightly.
Jay Chou, senior research analyst for IDC, commented: "Fortunately for PC makers, tablet growth has slowed.
"The PC ecosystem has also begun to see some fruits from efforts to narrow the divide between the PC and mobile devices in terms of both user experience and price points. Nevertheless, much more needs to be done as advances in both hardware and software are expected to benefit an ever wider spectrum of form factors, such as 2-in-1 devices that will further siphon volume from notebooks."