March 29, 2024

Bits Blog: Intel Expects Lower Revenue Because of Drive Shortage

Nir Elias/Reuters

Intel has announced that it expects revenue in the fourth quarter to be 7 percent less than expected, or  $1 billion.

It blamed a worldwide shortage of computer hard disk drives. October’s floods in Thailand severely affected the production of most of the world’s biggest manufacturers of hard drives. With fewer hard drives available, the makers of personal computers and computer servers are building fewer computers and thus need fewer semiconductors from Intel. While such shortages have been anticipated since the first hard drive factories closed, over the last two weeks the PC manufacturers have briefed Intel on the diminished need for chips, said Stacy J.  Smith, Intel’s chief financial officer.

Mr. Smith, who also said that Intel’s projected gross margins would fall to 64.5 percent from 65 percent, said the projected drop in orders “does not change our view that demand for personal computers and servers is healthy and growing.” The projected decline in revenue, to $13.7 billion from $14.7 billion, comes after a record quarter from Intel.

The shortage is expected to continue into the first quarter of 2012, as Thai manufacturers rescue and refurbish their factories. Intel expects the supply situation to improve toward the end of the first half of the year.

The depth of the demand decline appeared to shock the market. Shares in Intel were trading at midday at $23.83, down 4.7 percent. Advance Micro Devices, the second-largest maker of semiconductors behind Intel, was down 4.3 percent, at $5.30. The personal computer maker Hewlett-Packard was at $27.08, off 2.5 percent, and Dell was at $15.32, down 3 percent.

Article source: http://bits.blogs.nytimes.com/2011/12/12/intel-expects-lower-revenue-because-of-drive-shortages/?partner=rss&emc=rss

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