The Santa Clara, California-based company is due to give its mid-quarter update on Thursday. Because of its size, Intel is seen as a barometer for the chip industry, which is hoping to recover this year from its worst downturn ever.
Intel had been projecting revenue of $6.5 billion to $7 billion for the first quarter, which is down historically from the holiday shopping-fueled fourth quarter.
"We're expecting that they're going to narrow the range slightly, toward the mid-point, maybe higher," said Mark Grossman of SG Cowen Securities.
"But they'll remain cautious about the outlook and the corporate recovery in the PC market," he said. There's still no real sign that we're going to see this big recovery this year," particularly with the possibility of war with Iraq.
David Wu of Wedbush Morgan Securities said he is expecting Intel will tighten its revenue range toward the high end and is forecasting revenue of $6.8 billion, which would be down 5 percent from the previous quarter.
"A normal first-quarter drop could be as much as 10 percent, so if they drop single digit that's considered good," Wu said, citing reports that demand for microprocessors is better than expected in Asia.
In his report previewing Intel's mid-quarter update, Joseph Osha of Merrill Lynch also forecast revenue of $6.8 billion, based on an inventory analysis and pricing checks.
There were low inventory levels in the PC supply chain entering the first quarter and Intel seems to be shifting toward selling higher-priced processors for PCs, Osha said.
However, Hewlett-Packard Co.'s "weaker-than-expected January quarter and outlook is not encouraging" for the world's largest maker of chips that serve as the brains of computers, Osha said.
In addition, Intel's attempt to raise high-density flash (memory) pricing by up to 20 percent does not appear to be working," he added.
Analysts polled by research firm Thomson First Call were predicting, on average, Intel would report first-quarter revenue of $6.75 billion and earnings per share of 12 cents.
The mid-quarter update comes as Intel prepares for its long-awaited push into wireless. On Wednesday, Intel will launch its Centrino package of microprocessor, chipset and software for wireless connectivity.