Updated from 2:42 p.m. EST

SAN FRANCISCO -- With

Intel

(INTC) - Get Report

tearing down fourth-quarter revenue expectations for the second time due to an arid global PC market, how are you feeling about any near-term upside in

Microsoft

(MSFT) - Get Report

shares?

The software maker's stock did take its requisite hit of 3% to $20.13 off the Intel news, falling even further to $19.51 by day's end, but investors are now forced to determine if a similar adjustment to longer-term expectations has to be made.

The warning from Intel, which

said Wednesday

that revenue in its fourth quarter will now fall 23% from a year ago to $8.2 billion -- a

mere

half-billion below what Wall Street analysts had expected -- wasn't a complete surprise.

Several Intel-watchers had been expecting, or at least had raised the idea of, another warning from the company following similar news from

Advanced Micro Devices

(AMD) - Get Report

and overall blah reports from the industry over the past month that inventories were re-bloating.

(Kudos, by the way, to a

DigiTimes

report on Dec. 9 that cited sources who scoffed at Intel's first fourth-quarter warning as still too optimistic, nailing it further with the idea that revenue would come in

as low as $8.2 billion

).

But it had all been going so well since late November, hadn't it? Tech stocks had gained more than 27% from what was now certainly a bottom in the market, and now that we'd all regained one-fourth of our retirement funds, the prospect of muddling through an economic recovery was suddenly a little more palatable.

Microsoft shares, which were climbing toward $21 before Intel spoiled the day, had done their own rebounding in the past six weeks. Oppenheimer analyst Brad Reback made one of the calls of last quarter, if not the year, on Nov. 21 when he presciently upgraded Microsoft at its 52-week low, saying essentially that the stock was just too cheap despite the upcoming macro-economic headwinds.

Since that time, Microsoft gained more than 18% -- until Wednesday.

Until Mr. Reback is kind enough to let us know when the run is over, we're left to our own devices in deciding how much stock to put into the average expectations of Wall Street analysts of, say, a price target of $28, or fiscal 2009 (June-ending) revenue of $64.1 billion.

Not a lot, seems to be the mounting evidence. Keep in mind the bleakness of what Intel has offered up to the tech sector: a revenue forecast that puts 2008 below what the company posted in 2007, and casts serious doubt that expectations of a 10% decline in revenue expectations are pessimistic enough.

For Microsoft, even the moribund 6.1% growth expected in fiscal 2009 revenue has to now be suspect, and since its next fiscal year starts on July 1, so, too, the projections for 7% growth in fiscal 2010.

And don't just go by Intel: rumors of an upcoming double-digit-percentage employee purge at Microsoft (as early as this month) appear to be increasingly accepted as a given.

Here we are, January 2009 and Microsoft may put as many as 10,000 employees on the streets. Given what that would say about the company's business expectations, do you like your chances at a 40% rise in the stock from here over the next 12 months?

An even longer-term problem for Microsoft is whether its days of double-digit growth are over. Even when PC demand picks up again, Microsoft's competitive position seems increasingly less secure, as low-cost "netbooks" merge with high-end smartphones to entice consumers who are trending toward portable computer/phone/music player. Great for companies like

Apple

(AAPL) - Get Report

and

Google

(GOOG) - Get Report

trying to be

the

mobile operating system, but not so great for Microsoft.

Shareholders don't seem likely to get their hands on much more of Microsoft's cash hoard of nearly $20 billion for now. And maybe a stock rally of 15% is enough for now. But if that price target of $28 appears increasingly elusive, shouts for a higher dividend may be more common.