Updated from 5:48 p.m. EDT

Repeat after me, class: The second half will be better.

Though Intel met its own lowered sales guidance, the giant chipmaker nonetheless disappointed today when it missed earnings, announced job cuts and reduced its capital expenditure outlook.

For the second quarter, Intel reported a profit of $446 million or 7 cents a share, according to generally accepted accounting practices. Per share earnings saw a drop of 50% from the preceding quarter.

The company said in its conference call that pro forma profit would have been a little over 10 cents a share, stripping out a $106 million charge to wind down an online services unit. By that reckoning, it missed analyst expectations by a 1 cent.

In after-hours trading, the stock was nearly unchanged, up 1 cent to $18.37. Intel lost 76 cents, or 4%, to close at $18.36 Tuesday. Shares have dropped 50% from their 52-week highs in January.

Besides the charge, the company had second-quarter acquisition-related costs. Those included $14 million in one-time charges for R&D and $229 million in amortization of acquisition-related intangibles, write-offs of intangibles and other costs.

Intel's sales reached $6.3 billion, within the range the company set when it

reduced its outlook in June, but 7% below last quarter's levels.

Revenues were about flat with last year. In the conference call, CFO Andy Bryant said the company was "comfortable business has stabilized and year-to-year declines are behind us."

Nonetheless, the chipmaker said that it would lay off 4,000 employees, mostly through attrition, from a staff of nearly 85,000.

While that news comes as a blow, rumors had circulated that layoffs could reach much higher, closer to 10,000.

Bowing to a gloomy demand outlook, the company also said it would chop two points off its gross margin guidance for 2002, dropping its forecast from 53% to 51%.

"If you had been shorting the stock, there's no reason to short anymore. You were right," said Prudential analyst Hans Mosesmann. But he said the bad news already was factored into the shares, which are trading at their lowest price-to-book levels in five or six years.

Intel's results "could have been much worse," says Jonathan Joseph, an analyst at Salomon Smith Barney.

One indicator likely to be seized upon by chip bulls: Despite overall weak demand, average selling prices for computing processors stayed flat as opposed to declining. Prices were buoyed by a slight strengthening in the server and notebook markets and an upturn in Pentium 4 sales in the last part of June.

Stable processor prices, however, were offset by weakened prices in the competitive flash memory and chipset markets, the company said in its conference call.

On the plus side, Intel said it gained share in both of those markets.

Geographically, revenue in Europe was "on the low end of historical seasonality, after a strong quarter," said President and COO Paul Otellini. "Emerging markets continued to grow, while mature markets remained weak."

China and Russia posted strong quarters, while the Americas and Asia Pacific all were down slightly.

The chip industry's biggest spender also said it now plans only $5 billion to $5.2 billion in capital expenditures for the year, down from the $5.5 billion it outlined earlier in the year. But in the conference call, Otellini said most of the cuts would come not from manufacturing, but from delayed construction of office buildings and department-by-department budget trimming.