Intel Corp, the world's largest chipmaker, reduced its fourth-quarter revenue forecast by about $1 billion, citing a shortage of hard-disk drives for personal computers.
The company now expects revenue to be $13.7 billion, plus or minus $300 million, compared with a previous estimate of $14.7 billion, give or take $500 million, according to a statement today. Analysts predicted $14.7 billion, the average of estimates compiled by Bloomberg.
While PC sales will rise in the fourth quarter from the previous three months, customers are cutting back on their stockpiles of parts because they expect hard-disk shortages to reduce output, Intel said. Those shortages, resulting from the worst flooding in Thailand in 70 years, will continue into the first quarter, the chipmaker said.
"I am a bit surprised, I had thought that there would still be enough supply that Intel would be able to make its forecast," said Daniel Berenbaum, an analyst at MKM Partners.
LP in Stamford, Connecticut, who recommends buying the stock. "This is obviously not great news."
Shares of the Santa Clara, California-based company fell 3.7 percent to $24.09 at 10:09 a.m. New York time after declining 5 per cent, the biggest intraday drop since Aug. 18. Rival Advanced Micro Devices Inc. (AMD) fell 4.2 percent.
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Flooding recovery?
Intel, whose microprocessors power more than 80 percent of the world's PCs, is cutting the forecast after other chipmakers indicated the industry was recovering from the floods in Thailand, which makes about a quarter of the world's hard-disk drives.
On Dec. 1, Western Digital Corp. (WDC) joined Seagate Technology Plc (STX) in signaling that the industry was rebounding from the disaster when it raised its quarterly-sales forecast and said it has restarted production earlier than expected.
Gross margin, or the percentage of sales remaining after deducting costs of production, will be 64.5 percent, plus or minus a couple of points, compared with an earlier target of 65 percent, Intel said today.
"The good news is that the gross margin is only 50 basis points below where they had previously guided to," Berenbaum said.