After twenty one years of profitability, Intel Corp., the world’s largest maker of chips and also one of the richest companies in the high-technology industry, may report a loss for the first quarter of its fiscal 2001, the company’s chief executive has reportedly said in a confidential memo send to the company’s employees.
“We are not going to wake up in six months with everything rosy again. After 87 quarters of profit, the first quarter is too close to call,” said chief executive officer Paul Otellini to employees last week in an internal memo obtained by Bloomberg News.
The fourth quarter of FY2008 was dramatic for Intel, as not only revenue dropped below the level of Q3, but the pace of revenue decline was too high to predict it, the company indicated. Moreover, the company decided not to provide any official forecasts for the first quarter citing overall market situation and impossibility to predict any outcomes.
“In light of the uncertainty in the current environment, rather than provide precise ranges for typical outlook items, we will provide business drivers for some items and wider than typical ranges for others. Intel is not providing a revenue outlook at this time. For internal purposes, we are currently planning our business for first quarter revenue to be in the vicinity of $7 billion,” said Stacy Smith, chief financial officer of Intel during a conference call with financial analysts.
Analysts have estimated a first-quarter profit of $228.9 million for Intel, according to a Bloomberg survey.
Intel has already announced intentions to cut flexible spending and cease production on certain facilities in order to further reduce its expenses.
Uncertainties at Intel raise questions whether other companies in the semiconductor and the high-tech industry will be able to remain profitable in the coming months. It is clear that the first quarter of 2008 will be extremely tough after slow fourth quarter and expense cutting programs deployed by numerous companies. However, the situation in the second quarter seems to be completely uncertain.