Intel Cuts 4Q Revenue Estimates By $1 Billion - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Infrastructure // PC & Servers
News
12/13/2011
11:59 AM
Connect Directly
LinkedIn
Twitter
RSS
E-Mail
50%
50%

Intel Cuts 4Q Revenue Estimates By $1 Billion

As primary culprit for sales miss, chip giant cites PC customers scaling back on inventory due to hard drive shortages.

Windows 8 Upgrade Plans: Exclusive Research
Slideshow: Windows 8 Upgrade Plans: Exclusive Research
(click image for larger view and for slideshow)
Intel said Monday it is revising down its fourth quarter revenue estimates to $13.7 billion, from $14.7 billion. The company said its $1 billion shortfall was due to customers reducing their own sales estimates due to hard drive shortages that have resulted from floods in Thailand. The floods have disrupted various parts of the supply chain for computer manufacturers, including production of hard drives.

This is the second time that Intel has revised down its fourth quarter numbers. However, this revision comes close to the end of the company's fourth quarter and resulted in a 4% drop in chipmakers share price on Monday. At around noon on Tuesday, the stock is down another 1.5%.

While a $1 billion shortfall is not trivial, Intel continues to have a good year. Its stock is up 12.7% year to date, and even with the shortfall, the company's sales will be up sequentially. The company slightly increased guidance for its gross margins, saying they'd be approximately 65%--up from the previous estimate of 64.5%. Intel's margins overall remain extremely strong, ranging from a recent high of 67% Q2 2010 to a low of 61% in Q1 2011. It's not unusual for chipmakers to see some variance in margins as they bring on new processes as a normal part of their operations.

[ Learn more about AMD's new chip. Read AMD Designed Bulldozer For Large Virtual Machine Loads. ]

Drive shortages are likely to persist into the first quarter, after which, PC makers will have to rebuild their inventories. In the long run, a bigger threat to Intel's revenue stream could be a more pronounced move to the use of ARM processors in everything from handhelds, laptops, and servers. While dominant in handhelds such as smartphones and tablets, the ARM processor is just beginning to make its way to laptops and servers. The next generation of the chip will sport a 64-bit architecture as well as key architectural features required for virtualization. The ARM chip's primary advantage over Intel's are a lower gate count and low power consumption. Intel's own low-power processor, the Atom, is seen as a few generations behind this ARM in terms of its low power design.

ARM's threat to Intel's server chip business is years off, if indeed it ever materializes as a significant threat. Meanwhile, the company's chief rival there, AMD, seems to have stumbled with its most recent chip. Performance of AMD's "Bulldozer" has been disappointing.

IT's spending as much as ever on disaster recovery, despite advances in virtualization and cloud techniques. It's time to break free. Download our Disaster Recovery Disaster supplement now. (Free registration required.)

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
News
IT Employment Trending Up; Data, Cybersecurity Skills in Demand
Jessica Davis, Senior Editor, Enterprise Apps,  11/11/2020
Slideshows
The Ever-Expanding List of C-Level Technology Positions
Cynthia Harvey, Freelance Journalist, InformationWeek,  11/10/2020
Commentary
How to Approach Your Mission-Critical Big Data Strategy
Mary E. Shacklett, Mary E. Shacklett,  11/17/2020
White Papers
Register for InformationWeek Newsletters
Video
Current Issue
Why Chatbots Are So Popular Right Now
In this IT Trend Report, you will learn more about why chatbots are gaining traction within businesses, particularly while a pandemic is impacting the world.
Slideshows
Flash Poll