In after-hours trade, Intel shares plunged as much as eight percent to 19.25 -- a 15-month low -- after ending the regular session up 0.9 percent to 21.63. The stock is down 22 percent since the end of June and 14 percent since the end of July.

The Santa Clara, California-based company now expects sales between 8.3 billion and 8.6 billion dollars compared with an original range of between 8.6 billion and 9.2 billion dollars.

Analysts had expected sales of 8.89 billion dollars and earnings of 30 cents a share, on average, according to Thomson First Call.

The gross margin target was lowered to 58 percent from a previously targeted 60 percent; Intel also dropped its full-year gross margin target to a range of 58 to 60 percent from an already reduced goal of around 60 percent.

Intel said demand for its primary chip products is below expectations due to weak end demand and customer reductions of inventory. Flash memory shipments have also trended below plan.

In response to its new outlook, Intel cut its spending plan to 2.4 billion dollars from 2.5 billion for the current quarter, which ends September 25.

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