NEW YORK (CNN/Money) - Shares of Intel Corp. slid about 3.5 percent in early trading Wednesday after J.P. Morgan cut its earnings estimates on the world's largest chipmaker and the company released its annual 10-K filing with the Securities and Exchange Commission.

J.P. Morgan said it expects Intel (INTC: down $1.60 to $31.39, Research, Estimates) to earn 11 cents per share in the second quarter, down from its previous estimate of 14 cents, and 60 cents a share in fiscal 2002, below its previous view of 69 cents . The firm cited price cuts, high inventory, and confusion about competing products in reducing its estimates.

Analysts expect Intel to earn 15 cents a share in the second quarter and 68 cents for the full year, according to research firm First Call.

Intel also filed its annual report with the Securities Exchange Commission, although much of the information already had been reported. The company said it will reduce capital expenditures to $5.5 billion in 2002, down from $7.3 billion the prior year. It made the same projection in January.

In addition, the company said it sees gross margins of 51 percent in 2002, up from 49 percent in 2001. Intel previously said it expected gross margins to be above 50 percent, plus or minus a couple of points. The company's gross margins are closely watched as it does not usually provide earnings per share estimates.

Intel also said "economic indicators remain weak, and we continue to be cautious, although the steep declines we saw over the past year appear to have abated. We expect to be ready for a turn in the economy, with products, capacity and people in place, but we cannot predict when that will happen."