Investors prepare for possible bad news from Intel

A declining PC market has pushed the earnings per share forecast for Intel down to 50 cents.

The question Wednesday was whether the company's earnings, to be announced after the market close, would be below that.

Estimates for earnings per share had been 52 cents a month ago and 51 cents a week ago. The consensus estimate as of Wednesday was an average of 50 cents on sales of $13.1 billion, according to Thomson Financial.

Betsy Van Hees, an analyst with Wedbush Securitiesin Los Angeles, said the lowered estimates were actually good for Intel "because it lowers the bar for them" in terms of expectations, she said of the consensus estimate.

Webush estimated Intel's INTC revenue would be $13 billion. Intel shares were down 0.5% on Wednesday. They are down 19% this year.

There had been hopes at the beginning of the year that chip sales might rise significantly due to the upcoming release of Windows 10 sometime after July 29, which could cause PC users and businesses to upgrade their machines.

However, because current Windows 7 and 8 users will get a free upgrade to the new Microsoft operating system, "there are now doubts about how big that refresh cycle will be," said Mark Hung, lead Intel analyst for the Gartner Group.

Gartner issued a report last week showing a 9.5% decline in PC sales globally in the second quarter as compared to the second quarter of 2014.

IDC, another research firm, pegged the drop at 11.8% when tablets are not included in the total.

Van Hees was confident Intel will "pull some levers" to lower operating expenses and capital expenditures. "I think we could see a nice upside surprise on the bottom line," she said.

The Oregonian last month reported that Intel is planning layoffs, though no numbers have been given.

The company has about 107,600 employees, 55% of whom work in the United States. In 2014 Intel laid off about 3,700 employees, according to its annual report.

A crucial question will be how well PC sales do during the Back to School months of August and September, said Gartner's Hung.

"If doesn't have to be super strong, but if it's even a little better than what's expected, that's a good sign for Christmas sales," he said.