Intel cuts its Q3 revenue forecast by about $1B
Poor sales of PCs to enterprises and emerging markets force Intel to cut third quarter forecast
IDG News Service - Intel shaved about a billion dollars off its third-quarter revenue forecast on Friday, blaming the global economy for slowing sales. It will announce full results for the quarter on Oct. 16.
The company had previously predicted third-quarter revenue of between $13.8 billion and $14.8 billion, but on Friday lowered its forecast to between $12.9 billion and $13.5 billion.
In last year's third quarter, Intel reported record revenue of $14.2 billion, but by the second quarter this year revenue had slipped to $13.5 billion.
Intel said it would usually expect its customers to be increasing inventory in the supply chain at this time of year, but instead they are cutting back. Enterprise PC sales are soft, and demand for products based on Intel chips is slowing in emerging markets, the company said.
Market watcher IHS iSuppli also pointed to reduced demand for PCs and related electronic components last month, when it said it now expected global semiconductor sales to shrink by 0.1% this year, rather than grow by up to 3% as it had previously forecast. This year will be the first year of decline in semiconductor sales since 2009, the company warned.
The economic situation has hit semiconductor manufacturers in Europe and Japan harder than it has hit Intel, iSuppli said earlier this week in a round-up of second-quarter semiconductor sales figures.
European chip makers saw their second-quarter revenue fall by an average of 8.3% year on year, compared to a 3.1% rise at Intel for that quarter. STMicroelectronics' revenue fell 16.4%, while at Infineon Technologies second-quarter revenue was 12.9% down on a year earlier, iSuppli said. Japanese semiconductor suppliers, meanwhile, saw revenue drop 7.5% for the same period.
A continued decline in revenue could also hit profitability, Intel said. It narrowed its forecast for third-quarter gross margin to between 61% and 63%, from a previous forecast of 61% to 65%.
One bright spot for Intel is the company's data center business, which is meeting revenue expectations, the company said.
Intel said spending on research and on mergers and acquisitions will remain unchanged from the previous forecast, while capital spending for the full year will fall below previous forecasts as the company finds ways to reuse existing equipment in more advanced manufacturing processes.
- Silicon Valley's 19 Coolest Places to Work
- Is Windows 8 Development Worth the Trouble?
- 8 Books Every IT Leader Should Read This Year
- 10 Hot Hadoop Startups to Watch
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- Aberdeen Group: Marketing Analytics for Manufacturing: Forging Customer Insights There are no recalls for poor marketing. Manufacturers need to get their customer intelligence and messaging right the first time. Learn how.
- The Brave New World of Customer-Centric Manufacturing The Unique Opportunity for Manufacturers to Better Understand their Consumers
- See the Possibilities Utilizing Data Visualization Do you simply want to collect data, or do you want to derive business insights from it? What if you could quickly and...
Changing the Way Government Works: Four Technology Trends that Drive Down Costs and Increase Productivity
This paper discusses four technology-based approaches to improving processes and increasing
productivity while driving down department and agency costs.
Enhance Your Virtualization Infrastructure With IBM and Vmware
Date: Wednesday, May 14, 2014, 1:00 PM EDT
Virtualization technology is now expanding beyond the server compute elements to encompass networking and storage...
Transforming Finance, Procurement and Supply Chain Effectiveness with Cross-Functional Analytics
Date: May 6th, 2014
Time: 1 PM EDT
Attend this Webcast to find out how Oracle's packaged analytic applications enable line-of-business managers to examine all...
All IT Industry White Papers |