Remember that rosy picture that Intel CEO Paul Otellini painted in mid-July about how everything was simply lovely and how "the PC and server segments are healthy and demand for leading-edge technology will continue to increase for the foreseeable future?

Well, it's turning into "The Portrait of Dorian Gray."

Those warning signs that Wall Street was getting about the chip market turning down were on the money.

Intel Friday morning lowered its buoyant outlook of a few weeks ago and cut its Q3 projections of sales of $11.2 billion-$12 billion down to $10.8 billion-$11.2 billion.

Analysts that were really thinking $11.5 billion will have to adjust even more.

Intel blamed a slippery-fingered PC consumer in "mature markets" for finally losing his grip on his economy-tossed end and indicated that inventories across the supply chain appear to be in-line with its revised expectations.

It also took down its Q3 gross margin projection from 67% to a still fluffy 65%-67% and said the impact of lower volume is being partially offset by slightly higher ASPs attributed to "solid enterprise demand."

The announcement briefly halted trading in Intel stock.

Intel is supposed to post its third quarter on October 21.