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

Arik Hesseldahl — Mon, 12 Dec 2011 14:27:07 +0000

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.

Apple's Touch-Panel Appetite Leaves Little for Rivals

John Paczkowski — Thu, 17 Feb 2011 16:35:54 +0000

Apple is to the touch-panel business what Starbucks is to the coffee business–a market maker and mover. Particularly a mover. To wit: Claims today that Apple’s voracious appetite for the component is expected to cause an industrywide shortage this year.

According to Taiwanese trade mag DigiTimes, Apple has locked up nearly 60 percent of the world’s touch-panel capacity, leaving behind a very tight supply for its rivals to scrap over.

“Touch panels are currently suffering the most serious shortage due to Apple holding control over the capacity of major touch panel makers such as Wintek and TPK, and with US-based RIM, Motorola and Hewlett-Packard also competing for related components,” says DigiTimes. “Second-tier players are already out of the game.”

So Apple ends up with a double advantage–not only has it secured supply enough for its own needs, but it has also caused scarcity in the market and disadvantaged its rivals. It’s impossible to say definitively, but my guess is this is the result of that mysterious $3.9 billion component supply investment COO Tim Cook mentioned during Apple’s first-quarter earnings call.

“We’ve historically entered into certain agreements with different people to secure supply and other benefits. And the largest one in the recent past has been we signed a deal with several flash suppliers back at the end of 2005 that totaled over $1 billion because we anticipated that flash would become increasingly important across our entire product line and increasingly important to the industry. And so we wanted to secure supply for the company, and we think that, that was an absolutely fantastic use of Apple’s cash. And we constantly look for more of these. And so in the past several quarters we’ve identified another area and come to some recent agreements that [CFO Peter Oppenheimer] talked about in his opening comments, in that these payments consist of prepayments and capital for process equipment and tooling. And similar to the flash agreements, they’re focused in that area we feel is very strategic.”

Indeed. Funny how Apple now controls–largely—both the demand and supply sides of the touch panel business.

Internet Access in Hotel Rooms

Walter S. Mossberg — Thu, 20 Jan 2011 02:00:15 +0000

I have a 3GS iPhone. Is there a way to connect it to the Internet cable found in hotel and motel rooms?

Not that I know of. But you can do this indirectly by creating your own Wi-Fi network from the wired connection in the room. There are two ways to do this.

One possibility is to carry a small portable router. These are small devices that plug into the wired connection and propagate a Wi-Fi signal in the hotel room that the iPhone (or other devices, like laptops and tablets) can use. A second option is to plug a laptop into the physical connection and use it as a Wi-Fi base station by setting up what’s called an “ad hoc” or computer-to-computer Wi-Fi connection. Steps for doing this, which can be a bit techie, differ depending on whether you use a PC or Mac.

I have been struggling with a hard drive space shortage for at least a year. I have deleted duplicate emails. I have deleted videos and word files and put them on a stand alone hard drive. Do you have any other suggestions?

If you don’t want to, or can’t, replace your laptop, and don’t want to be tethered to your external hard disk, you might look into buying a new, larger, internal hard disk.

Many stores and consultants can sell and install larger hard disks, and even transfer the data from your old one.

I have thousands of photos on my computer and external hard drives. I’m in the process of trying to organize them on one hard drive and noticed that there are many duplicates between the different devices. Is there one program that you recommend that reliably detects and allows the removal of duplicate files?

You might try using Google’s Picasa to sweep the drives, locate the photos, and display them.

The program has a feature that can avoid importing duplicates. Once imported, if there are still duplicates, Picasa offers methods to hide or actually delete them from your disk. Information on this is at http://bit.ly/8YKTzy.

You can find Mossberg’s Mailbox, and my other columns, online for free at the new All Things Digital website, http://walt.allthingsd.com.

Now at Sprint–66 Percent Markdown on Initial EVO Sales Figures

John Paczkowski — Wed, 09 Jun 2010 12:05:12 +0000

Sprint’s new HTC EVO 4G smartphone is a big seller–just not quite as big as the company first claimed. Last week, the carrier claimed the EVO was its fastest-selling device ever, moving more than three times as many units on its first day as the Samsung Instinct and Palm Pre over their first three days on the market combined.

Turns out, that’s not quite the case: Sprint’s claim was off by a factor of three. In its first day at market, the EVO sold as well as the the Instinct and Pre in their first three days combined, not three times as well.

“We originally reported that the total number of HTC EVO 4G devices sold on launch day was three times the number of Samsung Instinct and Palm Pre devices sold over their first three days on the market combined,” Sprint said in a corrected press release today. “We inadvertently erred in the comparison.”

A bit of an embarrassment for Sprint (S), which has been hyping the EVO and its presales for some time now. That said, the device is selling quite well. In fact, it has reportedly sold out at a number of outlets and is in short supply at others.

Not that that’s good news, as BTIG analyst Walter Piecyk notes. “It should be disappointing to investors that the company was not prepared to sell more phones given the demand,” he wrote in a note to clients today.

“While sales of the HTC EVO were much stronger than the Palm Pre last year,” Piecyk added, “Sprint had been assuring investors that they would be well-stocked with inventory and that the component shortages that Verizon had experienced with the HTC Incredible would not impact their launch of the EVO. We understand the value in just-in-time inventory, but would it have hurt to have an extra 100,000 phones ready even if it meant carrying some inventory through the end of the quarter?”

Given Sprint’s revelation, Piecyk now believes Sprint sold about 150,000 EVOs during its first weekend at market, down significantly from his earlier forecast of 250,000 to 300,000.

iPhone 3GS–The S Is for "Shortage"

John Paczkowski — Mon, 29 Jun 2009 14:27:06 +0000

The iPhone 3GS has been on the market just 10 days now, and already a growing number of Apple (AAPL) stores around the country are running short of the device. It seems that demand for the 3GS, which topped one million units sold its first weekend at market, has exceeded even the company’s presumably aggressive targets.

At the time of this writing, Apple’s iPhone availability widget (pictured) is showing shortages of various iPhones at Apple stores across the United States. The device is completely sold out in states like Alabama, Delaware and Kentucky, where Apple (AAPL) has a limited retail presence. In others, its availability varies, though there seems to be higher demand for black phones than white.

An impressive performance, particularly at a time when consumers are inclined to be more frugal than usual.

iPhone 3GS–The S Is for "Shortage"

John Paczkowski — Mon, 29 Jun 2009 14:27:06 +0000

An impressive performance, particularly at a time when consumers are inclined to be more frugal than usual.

Rubinstein and McNamee: Remaking Palm

John Paczkowski — Thu, 28 May 2009 19:14:42 +0000

What a wonderful curative the Palm Pre has proven to be for Palm. Especially considering that the device has yet to ship. In early January of this year, the company’s shares were trading below $3, having been dragged deep into the mud by a string of nasty quarterly losses. Five months later, after the Pre’s announcement at the Consumer Electronics Show, they’re trading at over $10.

And Jon Rubinstein and Roger McNamee are largely responsible for that. Rubinstein is an Apple (AAPL) veteran who’s now Palm’s (PALM) executive chairman. And McNamee, managing director of Elevation Partners, is the guy who recruited him for that position. Together, they’re remaking Palm in a bet-the-company move to recover its long-lost glory. Should be an interesting session.

Session Highlights

[ See post to watch video ]

Live Blog

A couple pieces of Palm-related breaking news before we begin. Verizon Wireless (VZ) CEO Lowell McAdam this morning said the company intends to sell the Pre about six months from now. Also, the Pre will reportedly sync with iTunes.
This session is prefaced by video of a faux-advertising shoot in which McNamee makes increasingly preposterous claims about the Palm Pre over Rubinstein’s protestations. It’s funny as hell, and not all that far off from reality if you know the company’s recent history. McNamee, as you may recall, made some silly claims about the Pre’s prowess in a March interview with Bloomberg–so silly that Palm was forced to file a Free Writing Prospectus with the SEC refuting them. So to hear McNamee boast that the Pre is the only handset based on alien technology–well, I wouldn’t be surprised to read that in Bloomberg tomorrow.
While the audience is still chuckling, Walt and Kara welcome Rubinstein and McNamee to the stage.
Walt kicks things off by noting Palm’s history of developing breakthrough devices and asking how the company’s doing now. “We hired a lot of new people into the company,” says Rubinstein. “Palm is a new company today….Palm had tremendous assets. The DNA is there. The way of thinking about great products is there.”
Walt asks McNamee about his claim that all iPhone owners with expiring contracts will switch to the Pre. At what time will that happen? “4:25 p.m,” quips McNamee.
What’s the depth of Elevation’s involvement in Palm? Pretty deep. McNamee says that because the opportunity at the company is so huge, he spends a lot of time on it. He notes that leaders in the smartphone market–Palm and RIM–each have very small market share. That means there’s a great opportunity for Palm to join them. “I wish I had the entire fund in Palm,” he said. “This is the thing that will define us.”
Kara asks how Rubinstein came to Palm. He says it was a compelling idea to take something that needed to be turned around and rebuild it. “It’s so rare to be able to start with a blank sheet of paper and start over. And we were given a blank sheet of paper with the device and the OS. The old Palm OS lasted 15 years but had run its course. We set out to develop a platform that will last us another 10 or 15 years.”
What lessons from Apple has Rubinstein brought to bear on his new work at Palm? “I worked with Steve for many years and learned a tremendous amount from him, the value of user experience and design–taste. I also learned the idea of great marketing…On the engineering side, I helped create the engineering culture at Apple, so obviously, the engineering culture at Palm bears some similarities to it.”

On to the demo. Discussing the idea of synergy–managing information across applications and multitasking. Multiple apps can be run at the same time. Not an infinite number, Walt notes, but quite a few.
On to media. MP3 player includes onboard support for Amazon’s (AMZN) MP3 Store. Files are downloaded directly over the air to the device. Very slick.
Plug the Pre into a PC and you’re offered the option of using the device as a USB drive, charging it or beginning a “media sync.” Interesting, using media sync, the Pre does indeed sync with iTunes, though it’s hamstrung by Apple’s DRM-protected songs. Can’t imagine that Apple’s too happy about that. Presumably, Apple legal is already drafting a letter. Pre appears to make iTunes think it’s an iPod.

How is Apple going to feel about that, asks Walt. Rubinstein dodges a bit, noting that there are a variety of ways of getting music out of iTunes. Walt pushes back, pointing out that this is the first non-Apple device that is recognized as an Apple device by a Mac. Rubinstein dodges again. Seems he’s pretty obviously using his Apple knowledge here. McNamee jumps in. “I don’t think so,” he says. “They are practically a monopolist and this is what consumers want. Consumers own all this media. I find it hard to believe that Apple will get bent out of shape.”
The media sync feature also works with iPhoto and syncs photos to the Pre. That’s not likely to go over well at Apple either.
Moving on now to WebOS, Palm’s new operating system. The key feature is the Web App Catalog, Palm’s analog to Apple’s App store. Palm will have just a dozen or so apps in the store when the Pre launches next week. Kara jokes that Palm should simply port all the apps in the Apple’s App Store over to its own store.
Rubinestein and McNamee demo a download of Fandango. Tap to download. App is downloaded over the air. Apps do not sync with iTunes, they’re stored on the device.
Fandango on the Pre looks and works pretty much as it does on the iPhone and the BlackBerry. It does have an interesting additional feature or two. A simple gesture adds a movie time to the calendar. Tap the screen and the Pre’s calendar ingests info from Fandango. Pretty elegant integration with the Pre’s core applications.
Moving on to universal search. Very slick and something the iPhone lacks. Search for D7 on the Pre device yields no results, but the user is offered the option of searching Google (GOOG), Twitter, etc., for the same query. The Twitter search reveals the following Tweet about iTunes syncing: “Apple may not like this, but it’s damn cool.” Indeed.
McNamee says the model here is “When in doubt just type.” Simple. Elegant.
When the demo ends, Walt asks about Palm’s competitors. Clearly Apple and RIM (RIMM), says Rubinstein. He adds that the battle that’s going to be fought is not about hardware, but software. McNamee interrupts to say the opportunity here is to persuade people to move from the “feature phone” to the integrated device. Apparently, the iPhone is a feature phone and the Pre is the integrated device here. McNamee going on and on about the Pre’s design. Feels great in the hand. The Pre has a mirror. “Never before has a device like this been designed for a woman.” Nice, Roger. Perhaps someday it will include a blow dryer as well.

Walt asks about the Pre’s keyboard, Rubinstein says that there are a lot of people who want keyboards. Applause from the audience. That said, the iPhone’s lack of a keyboard clearly hasn’t hurt it in the market.
More talk about McNamee’s “women like mirrors” comment. McNamee says device makers typically do not target the female audience. They traditionally target a male, testosterone-driven audience. McNamee seems to think the Pre will appeal to a wider audience–one with a larger female contingent than the iPhone and BlackBerry. McNamee appealing to audience to confirm its love of mirrors…
How do you woo developers away from the iPhone? Rubinstein says Palm doesn’t need to. It’s easy to develop for the Pre. “We have a great SDK.” Walt notes that the SDK hasn’t been widely distributed yet and the Pre is just days away from launch. Rubinstein says this was intended. “We’re doing this methodically.” There are hundreds of developers with the SDK right now, and thousands in the queue waiting for it. Why? McNamee jumps in again and says the company wants to get it right, but seems to suggest that the SDK may not be quite as polished as Palm would like.

When the Pre debuts will there be a shortage? Walt cites varying rumors about how many handsets will be available initially. Rubinstein says the company is in full production now and shipping devices every day to Sprint (S). That said, he expects there may be shortages due to high demand.
On to the Q&A: When will there be a GSM version? Palm expects to have one at some point in the future. What about the Verizon deal, asks Walt, noting this morning’s Verizon story. Rubinstein says he can’t comment. We do love Sprint and they are our exclusive launch partner,” Rubinstein said. “It sounds like AT&T (T) and Verizon both want it. I can’t comment on unannounced relationships.” He notes that BellMo will distribute the Pre in Canada.
Questioner wants to know about overlapping features in Pre, iPhone ? Yes, says McNamee, refering to the Pre’s EAS. As a generalization, everything you’re used to in an iPhone will be in the Pre as well. And if it’s not there initially it will be there soon.
Does Palm worry that Apple might break the Pre’s iTunes sync feature? McNamee doesn’t seem to think so. “We’re recognizing their market dominance…and they can’t tell people what to do with their music.
McNamee on his investment in Palm and the Pre: If I could have put everything into it, I would have.
End of Q&A

A note about our coverage: This liveblog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as we were able. It was not intended as a transcript and should not be interpreted as one.

Expect Palm Pre shortages

John Paczkowski — Wed, 20 May 2009 12:00:24 +0000

[ See post to watch video ]

Sprint CEO to Pre Buyers: Get Your Sleeping Bags Ready

John Paczkowski — Wed, 20 May 2009 11:00:23 +0000

One of the simplest ways to create a shortage, and the buying frenzy that typically accompanies it, is to announce that there will be one. And this is precisely what Sprint CEO Dan Hesse did for the Palm Pre Tuesday. Speaking at J.P. Morgan’s Global Technology, Media and Telecom Conference shortly after Sprint announced the handset’s street date, Hesse said he anticipates that supplies will be limited, at least initially. “We don’t intend to advertise it heavily early on because we think we are going to have shortages for a while,” Hesse said. “We won’t be able to keep up with demand for the device in the early period of time.”

Interesting thing to say in advance of a product launch on which so much is riding, don’t you think? Unless you’re already trying to foster the perception of excess demand. As Gartner analyst Hugues De La Vergne noted last month, “It’s important to have a success like selling out. The Pre has to live up to the hype or else they’ll lose their momentum to rival products coming out soon after.” And clearly, that’s a very real danger here. Though, to be fair, there are other possible explanations. It could simply be responsible production scheduling. It might also be that Palm’s financial situation has forced the company to temper its launch run-rate in order to retain adequate capital for marketing and customer service. Or it could be that Pre really is the blockbuster device Palm (PALM) and Sprint (S) believe it to be and no amount of supply will be enough to meet the initial and overwhelming demand for it. It could be that the Pre is the next Apple (AAPL) iPhone.

“What the iPhone has shown is that if you really do have a compelling device that is revolutionary then customers will switch to your service,” said Hesse. “We think the Palm Pre stacks up very well against the iPhone.”

We’ll find out come June 6.

Analyst: "The Pre Is DOA"

John Paczkowski — Thu, 30 Apr 2009 19:49:41 +0000

Here’s the flip side of reports that Palm plans to deliberately keep supplies of the Pre artificially low to foster the perception of a shortage and spur demand: There will be a shortage, but it won’t be deliberate or artificial.

Collins Stewart analyst Ashok Kumar claims that his supply chain checks indicate that Palm has “drastically reduced its production orders” for the Pre. Kumar says “multiple hardware and software issues” have forced Palm’s hand here and that he doesn’t expect the company to meet its expected goal of one million units shipped in the second half of 2009. He even goes so far as to describe that figure as “highly unrealistic.”

And that’s only the beginning of the company’s troubles, says Kumar, who was apparently wronged by Palm (PALM) in some previous life. It may face significant carrier issues as well: “Sprint is the only major carrier that has signed on to sponsor the Pre platform. Sprint, which has only a third of the subscriber base of either AT&T or Verizon, has been losing customers due to structural problems,” he writes. “In our opinion, it is highly unlikely customers of AT&T or Verizon will switch to Sprint. Across the pond, carriers are taking a wait and see attitude given the high platform cost and lack of conviction on sell through. If Sprint does not match or beat AT&T’s subsidized iPhone price of $199, which translates to a subsidy in excess of $200, the Pre is DOA.”

A decidedly more jaundiced view of the Palm’s position than we’ve been hearing. That said, it’s best considered with at least a portion of the skepticism it brings to the Pre’s prospects. Certainly, supply chain checks don’t always provide the most reliable data. And the Pre is generating quite a bit of interest in advance of its forthcoming launch–whenever that is.

Analyst: "The Pre Is DOA"

John Paczkowski — Thu, 30 Apr 2009 19:49:41 +0000

We're All Out of Smart Phones. Still Got a Bunch of These Dumb Ones, Though.

John Paczkowski — Mon, 21 Apr 2008 18:08:08 +0000

Turns out Apple (AAPL) isn’t the only company whose smart phones are in short supply this spring. According to Morgan Keegan analyst Tavis McCourt, Research in Motion (RIMM) and Palm (PALM) are suffering shortages as well.

In a research note, McCourt says RIM’s BlackBerry Pearl is pretty tough to find these days–online and off. And Palm’s Treo 755p has disappeared from Sprint’s shelves entirely. Customers looking for one must either settle for the Palm Centro or wait until the company releases the next iteration of the Treo 755p or the Treo 800w.

As McCourt notes, shortages like these are bad news for RIM and awful news for the downtrodden Palm. “The abrupt disappearance of the Treo 755p at Sprint is somewhat concerning,” observes McCourt. “This product was selling reasonably well and, although we expect its contribution to be marginal following the 800w’s launch this summer, the 755p’s absence at Sprint clearly means Palm is foregoing some near-term sales opportunities.”

It’s worth noting here as well that Apple is still dealing with a pretty lean inventory of iPhones. McCourt says about half of the Apple stores he contacted had the device in stock. Said McCourt, “While we believe this is related to a product transition, current iPhone shortages are almost certainly causing some degree of missed sales opportunities.”

We're All Out of Smart Phones. Still Got a Bunch of These Dumb Ones, Though.

John Paczkowski — Mon, 21 Apr 2008 18:08:08 +0000

Google: The "G" Stands for "Global Domination"

John Paczkowski — Mon, 21 Apr 2008 18:00:59 +0000

[ See post to watch video ]

Google: The "G" Stands for "Global Domination"

John Paczkowski — Mon, 21 Apr 2008 18:00:59 +0000

[ See post to watch video ]

Just in Time for Christmas: the Nintendo Waa!

John Paczkowski — Fri, 14 Dec 2007 23:36:41 +0000

Want to put a Nintendo Wii under the Christmas tree this year? Then follow a delivery truck. Otherwise you’re going to have to make do with a slip of paper, which is slightly better than nothing, but not much.

Unable to keep store shelves stocked with the highly sought video game console, Nintendo today said it will issue a raincheck to customers who aren’t able to purchase one in time for the holidays. Rainchecks, which can be purchased from GameStop, are available for the full $249 price of the system. “The system has remained a sellout virtually everywhere in America nonstop from the day it launched,” said Reggie Fils-Aime, president of Nintendo’s U.S. business. “There was no way for us to stockpile systems over the summer to meet the holiday rush. … [T]his shortfall benefits no one. Enough systems would make everyone, including me, happier.”

It certainly would. Analysts believe Nintendo has lost an estimated $1 billion in potential sales this holiday season because of the Wii shortage. “It’s staggering,” MDB Capital Group analyst James Lin told the New York Times. “They could easily sell double what they’re selling.”