Intel shares hit by profit warning

The semiconductor giant blamed weak demand in Europe for a reduction in its earnings during the April to June period.

The profits warning came after the New York stock market had closed.

Intel's shares fell 10% to $24.18 in after-hours trading, having already fallen by more than 4% during the day.

This prompted a big sell-off of technology shares on the Tokyo stock market.

Price cuts

Andy Bryant, Intel's chief financial officer, said that demand from corporate customers hadn't picked up as expected.

According to Jonathan Joseph, an analyst at Salomon Smith Barney, Intel's sales might have been hit because customers delayed computer purchases while they waited for Intel's sharp price cuts on 26 May.

The price cuts averaged 31% for desktop processors and 46% for notebook chips, Mr Joseph said.

Intel now expects revenues for the quarter to come in between $6.2bn and $6.5bn.

Its April forecast ranged from $6.4bn to $7bn.

Weak demand

The spring quarter lacked both major holidays and back-to-school sales that sometimes boost sales.

But Intel said that its communications, laptop and server businesses were performing within its own forecasts.

And Mr Bryant said that back-to-school orders for its chips has ticked up.

"We've seen some increase, but I wouldn't call it a surge," he said.