Intel's Earnings Set to Decline Due to Weakening PC Sales

Intel Lowers Q3 Revenue Guidance

by Anton Shilov
08/27/2010 | 06:19 PM

Intel Corp. early on Friday announced that third-quarter revenue will be below the company’s previous outlook. The company now expects third-quarter revenue to be $11.0 billion, plus or minus $200 million, compared to the previous expectation of between $11.2 and $12.0 billion. Revenue is being affected by weaker than expected demand for consumer PCs in mature markets.

 

“It’s very unusual to release that negative press release at 10 a.m. Just the fact that it was done during market hours is bizarre," said Andrew Hooker, an equity trader at Wells Fargo Securities LLC, reports Bloomberg news-agency.

http://www.bloomberg.com/news/2010-08-27/intel-investors-whipsawed-as-forecast-upstages-bernanke-trades-are-voided.html

The company’s expectation for third-quarter gross margin is now 66%, plus or minus a point, lower than the previous expectation of 67%, plus or minus a couple of points. The impact of lower volume is being partially offset by slightly higher average selling prices stemming from solid enterprise demand. Inventories across the supply chain appear to be in-line with the company’s revised expectations.

Investors of Intel were furious about the company's inability to report about lower sales last week during the announcement of plans to buy McAfee. However, Intel said that last week it did not have all data in.

The warning by Intel is likely to trigger a serious of warnings by smaller technology companies, including direct rival Advanced Micro Devices, software giant Microsoft Corp., multimedia chip company Nvidia Corp. and many more.

All other expectations for the third quarter remain unchanged. The outlook for the third quarter does not include the effect of any acquisitions, divestitures or similar transactions that may be completed after August, 26.