Thailand Flooding Throws Wrench in Intel’s Earnings
Tuesday, December 13th, 2011Blaming hard-disk drive supply shortages in the wake of massive flooding in Thailand, Intel on Monday warned investors that the company’s fourth-quarter results might be below its previous outlook.
Intel now expects fourth-quarter revenue to total about $13.7 billion. That’s significantly lower than the previous expectation of $14.7 billion, plus or minus $500 million. The news sent tech shares downward on Monday.
The saving grace, if there is one, is Intel’s gross margin won’t suffer much. Intel expects the fourth-quarter gross margin to be 64.5 percent, plus or minus a couple of percentage points. That’s only slightly lower than the previous expectation of 65 percent. Intel noted that all other expectations remain the same.
“In the last two weeks, as the supply became more apparent, we saw a substantial change in our order rate,” said Intel senior vice president Tom Kilroy. “Most of our customers are concerned the shortage will continue — especially through the early part of the first quarter.”
More Bad News
Although sales of personal computers are expected to see fourth-quarter gains, Intel is facing a revenue-denting reality: The worldwide PC supply chain is reducing inventories and microprocessor purchases as a result of hard-disk drive supply shortages. Making matters worse, Intel expects hard-disk drive supply shortages to continue into the first quarter before recovering sometime in the first half of 2012.
“I am a bit surprised — I had thought that there would still be enough supply that Intel would be able to make its forecast,” Daniel Berenbaum, an analyst at MKM Partners LP, told Bloomberg. “This is obviously not great news.”
It’s not good news for any PC maker. Indeed, Intel is not the only company to feel the impacts of the Thai flooding and the resulting hardware shortages. The likes of Dell, Hewlett-Packard, Lenovo and Acer will likely be forced to…
View full post on NewsFactor Network