Poor Sales Force Intel to Chip Off 4,000 More Jobs

Intel, the world's leading maker of computer chips, last night announced plans to cut 4,000 jobs and reported weaker than expected earnings and sales for the second quarter.

The group blamed sluggish European demand for sales of $6.3bn, little changed from last year. Earnings excluding one-off costs were $620m, down 27% on the previous year.

"The recovery is being pushed out," said chief financial officer Andy Bryant. "Even though the economy appears to be recovering in other parts of the US, my guess is most chief executives will wait until they are confident of a recovery before starting to spend on IT."

For much of the downturn Intel had struggled to avoid big job losses but it was forced last year to cut 5,000 staff. Yesterday's announcement of further job losses was seen as evidence that it sees no sign of an upturn.

There was further gloomy news from Apple, which also posted a slide in earnings and sales for its third quarter. Sales were $1.43bn against $1.48bn a year earlier, while earnings fell from $61m to $32m.

It warned that sales in the fourth quarter would not beat those in the third but said it still expects to make a modest profit. Shares in both firms were lower - Apple fell $1.16 to $16.70 in after-hours trading while Intel was more than 4% lower at $18.60.

A computer market recovery is still proving elusive - Micron, the second largest chip-maker, reported surprise losses last month, blaming weakness in PC demand.