Arik Hesseldahl

Recent Posts by Arik Hesseldahl

Intel Slashes Sales Outlook by $1 Billion on Hard Drive Shortage

Chipmaker Intel just warned that fourth-quarter sales will come in below expectations because of hard drive shortages that are hurting the PC industry, and thus sales of its microprocessors.

Intel now says that it expects its sales in the fourth quarter to come in at $13.7 billion — $1 billion shorter than previously given guidance. It also said it expects its gross margin to be lower by a half-percentage point than before: 64.5 percent, plus or minus a couple percentage points, down from 65 percent plus or minus.

Intel shares dropped nearly 4 percent on the news, and traded at $24.06, down 96 cents, by 9:35 am ET. The news rocked several stocks in the PC sector. Intel rival Advanced Micro Devices also fell by more than 3 percent, down 19 cents to $5.35. Hewlett-Packard, the world’s biggest maker of personal computers, fell nearly 2 percent to $27.27, down 51 cents. Dell fell 2 percent to $15.37, down 32 cents. Microsoft fell 35 cents, or more than 1 percent, to $25.35.

The hard drive industry has been hit with severe flooding in Thailand, where many factories that build key components used in drives are based. Drive manufacturers have been predicting that the industry’s capacity to deliver drives will come in about one-third short of demand, making it probably the most significant supply-chain disruption to hit the PC industry in a generation.

Intel’s statement is below:

SANTA CLARA, Calif.–(BUSINESS WIRE)– Intel Corporation today announced that the company’s fourth-quarter results are expected to be below the company’s previous outlook due to hard disk drive supply shortages. The company now expects fourth-quarter revenue to be $13.7 billion, plus or minus $300 million, on both a GAAP and non-GAAP basis, lower than the previous expectation of $14.7 billion, plus or minus $500 million.

Sales of personal computers are expected to be up sequentially in the fourth quarter. However, the worldwide PC supply chain is reducing inventories and microprocessor purchases as a result of hard disk drive supply shortages. The company expects hard disk drive supply shortages to continue into the first quarter, followed by a rebuilding of microprocessor inventories as supplies of hard disk drives recover during the first half of 2012.

The company now expects the fourth-quarter gross margin to be 64.5 percent, plus or minus a couple of percentage points, lower than the previous expectation of 65 percent, plus or minus a couple of percentage points. The expectation for a non-GAAP gross margin is 65.5 percent, plus or minus a couple of percentage points, lower than the previous expectation of 66 percent, plus or minus a couple of percentage points.

All other expectations are unchanged.

Intel will hold a public webcast at 8 a.m. PST today on its Investor Relations website at www.intc.com. A webcast replay and MP3 download will also be made available on the site.


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik