Intel (NasdaqGS: INTC) cutting its fourth-quarter outlook on Monday further damaged technology sector exchange traded funds that were already drained by Eurozone debt fears.
Intel is the fifth-largest holding in PowerShares QQQ (NasdaqGM: QQQ) at 5.2% of the ETF, which tracks the Nasdaq-100.
According to a Morningstar research note, Intel lowered its fourth quarter projection Monday due to diminished near-term microprocessor demand as a result of hard drive supply constraints, notably from typhoon flooding in the industrial parks of Thailand. The shortage of HDDs is limiting the number of new PCs produced, which reduces the demand for microprocessors.
Intel now estimates lower-than-expected revenue of $13.4 billion to $14 billion, compared to its previous $14.2 billion to $15.2 billion expectation.
The company expects the supply shortage to continue into the first quarter, but demand for microprocessors from PC manufacturers should recover in the first half of 2012.
“On a slightly more positive note, management said the current near-term slowdown is entirely being driven by supply chain disruptions, as end market PC sales remain healthy and are actually expected to grow sequentially in the fourth quarter,” the Morningstar analysts said. “We expect to maintain our fair value estimate, as the issues appear to be short-term in nature.”
- PowerShares QQQ was down 1.74% at last check Monday.
- Semiconductor HOLDRs (AMEX: SMH) was down 3.82%. INTC is 24.5% of the portfolio.
- iShares PHLX SOX Semiconductor Sector (NasdaqGM: SOXX) was down 3.20%. INTC is 9.2%.
For more information on the tech sector, visit our technology category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.