Intel dropped its fourth-quarter revenue forecast by $1 billion in a bleak sign that demand has seemingly fallen off a cliff. The Santa Clara, CA-based company blamed a "significantly weaker" demand for the lower revenue forecast, and its stock will likely hit a 12-year low in the immediate future.

Intel's fourth quarter sales are expected to be around $9 billion, while company executives originally aimed for $10.1 billion to $10.9 billion.  Analysts predicted $10.3 billion in sales.

Intel will stop hiring new employees and will reduce discretionary spending, although it does not have any job cuts ready for the immediate future.

The global economic crisis has hit other industries first, but is finally hitting tech companies, as several other companies also have lowered forecasts and have started cutting jobs.

Cisco Systems reported last week that it saw a dramatic decline of sales orders in October, which alarmed analysts who assumed Cisco would be better suited to endure economic troubles than other companies.  In addition, Lenovo Group announced that its profits plummeted 78 percent.

"Of course, the big concern about the Intel announcement is that it is a bellweather of bad things to come for the technology industry, signaling, as chip companies often do, the early stages of tech spending declines to come," said IdaRose Sylvester, Freeform Dynamics Program Director.  "However, I caution people to question if the drivers here are Intel-specific, and related more to caution, not collapse, of its customers."

In separate news yesterday, IDC announced it lowered worldwide IT spending in 2009 due to the slumping economy.  The analyst firm originally believed 2009 spending would grow by 5.9 percent, but now anticipated a 2.6 percent increase compared with 2008.

Consumers and analysts will spend less on computer hardware, except for storage equipment, and the trend will continue throughout 2009.