Updated from 8:23 a.m. EST

Intel ( INTC) slipped early Friday as analysts returned mostly dour verdicts on its midquarter update.

The shares were recently down 76 cents, or 2.6%, to $28.89. The decline comes after the chip giant lopped the top off its sales guidance for the first quarter, citing a slight inventory buildup overseas.

In a release issued after the bell Thursday, the chipmaker said it now expects sales to be between $8 billion and $8.2 billion, compared with its January forecast for sales of $7.9 billion to $8.5 billion.

The midpoint of Intel's new guidance stands at $8.1 billion. Heading into Thursday's update, many analysts had expected the company to tighten its sales guidance toward the midpoint of the sales range predicted in January, or $8.2 billion.

Friday morning, CSFB cut its 2004 profit estimate on Intel to $1.15 a share from $1.20 a share, and lowered its price target to $33 from $36. It maintained an outperform investment rating. At Morgan Stanley, Intel's 2004 earnings estimate was cut to $1.27, although the shares continue to be rated overweight.

Piper Jaffray cut its 2004 estimate by 7 cents to $1.23 a share but recommended buying the stock at $28 given prospects for an improved spending environment later this year. Piper also cut 2005 estimates to $1.33 from $1.40.

On the postclose conference call, Chief Financial Officer Andy Bryant said the midpoint declined slightly because Intel's customers in Asia and Japan had seen a slight inventory buildup. However, he said the company believes the inventory overhang has been "worked through" by now.

"We're talking about a pretty small change, with the midpoint that was down 6% from the prior quarter now down 7%," he noted, in response to an analyst's question.

The Asia/Japan work-through was cited by analysts at ThinkEquity as reason for optimism; they say the $8.1 billion midpoint should be reachable.

Intel said demand for its microprocessors is "consistent with the lower end of normal seasonal patterns," though it remains "significantly higher" than the same period last year. It also said demand for communications silicon is in line with its expectations at the beginning of the quarter.

Bryant repeated the company's January prediction that the enterprise market will see a "slow, steady upgrade cycle taking place over a period of time," as opposed to a more rapid infrastructure upgrade. In a separate comment he added: "We don't know in the second or third quarter if the economy kicks into another level or not. It's too early to make that call."

Intel also said its gross margin percentage is expected to be 60%, plus or minus a point, as compared with the previous expectation of 60%, plus or minus a couple of points. Intel doesn't give earnings guidance.

The first-quarter consensus estimate currently stands at $8.27 billion in revenue with 28 cents in earnings, according to Thomson Financial First Call.