Intel Q4 2011: Revenue Guidance Cut - Hard Disk Drive Supply Shortages From Floods in Thailand

December 12, 2011

Intel'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.

Wall Street was expecting revenue of $14.65 billion.

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.

“A key takeaway for HDD suppliers now enduring the crisis in Thailand is to study the painful lessons from the Japan disaster, especially on how to be flexible with production capacity,” said Dee Nguyen, memory analyst at IHS. “NAND manufacturers were nimble in response following the quake, stepping in to increase production after the disaster hit one of their own. In the larger high-tech space, the catastrophe also started a conversation among companies about the vulnerabilities of the supply chain and their capability to manage unexpected events—allowing the overall industry to take a step toward disaster preparedness in the future.”