The economic slowdown affecting pc demand has continued and spread to the communications sector

Intel

In January, the firm forecast a drop of 15% in revenue, but has now upped this to a 25% decline in the first three months of the year compared to the previous three months.

The semiconductor blames the demise on the decline in PC demand which is now spreading to the networking, communications and server computers.

Cost-cutting

"The economic slowdown affecting personal computer demand has continued and spread to the networking, communications and server sectors," said the company in a statement.

The 85,000 workforce would be reduced by 5,000 over the next nine months, primarily through not replacing staff who leave or retire.

This, together with other cost-cutting measures, should help the company reduce its expenses by 15% this quarter.

But the company's gross margin percentage is now revised down to 51% from the previously estimated 58%.

Fourth quarter growth

The firm's fourth-quarter results managed to narrowly beat already lowered expectations.

The company said its fourth quarter sales rose 6% to $8.70 billion from $8.21 billion a year ago.

The news of job cuts and downgraded earnings estimates came after the close of the New York Stock Market.