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Tickers in this Article: INTC, DELL, HPQ, MU, IT, CSCO, MSFT, IBM
Intel (Nasdaq:INTC) lightened the market's mood with a surprisingly good third quarter. Investors shouldn't celebrate too much, though. It's still anybody's guess how Intel will fare in the coming quarters, but it appears trouble is ahead for the chipmaker.

Relief comes from the fact that the market had expected much worse results. The 20% drop in Intel's share price over the past three months reflects worries that the collapse of banks and other financial firms would weaken a big source of demand for PCs and servers that rely on Intel's chips. Intel's 12% jump in Q3 net profit gives some investors a reason to breathe easier.

Still, I'm not convinced that investors can put their worries to rest. Intel issued shaky guidance for the months ahead. It forecasts Q4 revenue to be between $10.1 billion and $10.9 billion, suggesting that revenue could come in below the $10.7 billion produced in Q4 last year. At the same time Intel warns, "Current uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters and makes it more likely that Intel's actual results could differ materially from expectations." (Explore the controversies surrounding companies commenting on their forward-looking expectations in Can Earnings Guidance Accurately Predict The Future?)

That kind of blurry outlook hints that problems may have been postponed - not avoided.

Next year could be when the global credit crunch really catches up to Intel, as well as to other big IT players such as Microsoft (Nasdaq:MSFT), IBM (NYSE:IBM) and Cisco (Nasdaq:CSCO). This week, market research group Gartner (NYSE:IT) slashed its 2009 corporate IT spending growth forecast from 5.8% to 2.3%, seeing big spending declines in Western Europe and the United States. First American Funds, meanwhile, expects corporate IT spending to decline or, at best, stay flat next year.

Even with the Christmas sales season approaching, little suggests that shoppers are scrambling to buy the latest Intel-powered machines from Dell (Nasdaq:DELL), Hewlett Packard (NYSE:HPQ) or other PC makers. Indeed, memory chipmaker Micron Technology (NYSE:MU) said this month that Q4 PC shipments could remain flat from Q3.

If things turn out as bad as some expect, Intel's revenues in Q4 could come in nearer the low end of its revenue estimates. Investors take note: that kind of worst-case scenario could prompt the market to find a new bottom for the share price.

Of course, even with the prospect of a tough 2009, by historical measures, Intel's beaten-down stock looks cheap. The share price of $15 hasn't been seen since the technology recession of 2002. Intel trades at just 12.5 forward earnings. But even cheap shares generally get cheaper when profits fall and prospects dim.

A small change in Intel's revenue could trigger big changes in profitability and, ultimately, the stock price. While the outlook for Intel is still far from clear, a best guess is that the changes are moving in the wrong direction. For the time being, investors can afford to give the stock a miss.

Find out which catalysts can turn struggling stocks around to create tidy profits in our related article, Turnaround Stocks: U-Turn To High Returns.

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