Intel's profit warning follows a profit warning

It's being called the "economic Katrina," and now there are signs that it has officially made landfall. After already preparing investors for bad news, Intel yesterday took the unusual step of proclaiming the news will actually be worse.

The first clear signs of an approaching financial maelstrom for Intel came as early as last April, when the typical seasonal downturn in revenue extended into double-digit percentages. Something was wrong -- demand from businesses and consumers alike was falling demonstrably, and low-margin businesses such as flash memory were already feeling a serious squeeze.

Last month, fears of the economic storms strength were confirmed, triggering Intel to adjust its revenue outlook sharply downward. But that was October; and in one month's time alone, the news for the company has gone from "worse" to "horrific:" Yesterday, after the close of stock trading, Intel adjusted its revenue forecast for this year's fourth quarter lower once again -- with Q4 not even half-over.

While Intel had been readying itself for $10.5 billion in revenue for the quarter, plus or minus $400 million, now it's expecting the number to be more like $9.0 billion, plus or minus $300 million -- a plunge of over 14%. Margins will be pinched lower, to 55% from an anticipated 59%, as prices drop in an effort to resurrect demand.

"Revenue is being affected by significantly weaker than expected demand in all geographies and market segments," Intel reported late yesterday. "In addition, the PC supply chain is aggressively reducing component inventories." In other words, in anticipation of lower sales that PC manufacturers and OEMs are already seeing the first signs of, they're ordering much fewer CPUs and motherboards. While those manufacturers will feel the bad tide come December, Intel is feeling it now.

While you might think the news would trigger a stock selloff, there really isn't much room for Intel to be sold off right now. At less than $13.50 per share, it's already trading at 11-year lows, and many analysts are still saying the stock could be undervalued.

In fact, on the premise that a rising tide sinks all ships equally, Intel's bad news actually impacted AMD more negatively, trading down nearly 3% this morning at already historic lows of around $2.50 per share.

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