Intel forecast hit hard by hard-drive woes

With the warning, the chipmaker becomes the latest technology company to take it on the chin from the hard-drive shortages undercutting the supply chain.

The hard-drive shortage is backing up the supply chain and Intel’s revenue will fall well below expectations as a result.

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Intel said that its fourth-quarter sales will be $13.7 billion, give or take $300 million. The company had projected fourth-quarter sales of $14.7 billion, give or take $500 million. Wall Street was looking for sales of $14.65 billion and earnings of 69 cents a share. Intel also said gross margins would be lower than expected at 64.5 percent. Wall Street expected 64.96 percent.

With the warning, Intel becomes just the latest technology company to take a hit. Texas Instruments also cut its outlook and cited the hard-drive shortages. Even DuPont noted that demand for its chemicals used in electronics manufacturing fell because of the hard-drive shortage. Flooding in Thailand set hard-drive makers and the associated supply ecosystem on its heels.

The working theory among analysts a few weeks ago assumed that the fourth quarter would be OK, but the first quarter would be rocky. Given the warnings of late, it’s clear that the fourth quarter is hampered by the hard-drive shortage too.

In a statement, Intel said:

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.

Texas Instruments said demand was weak in all of its markets—excluding mobile. Ron Slaymaker, TI’s head of investor relations, said:

In the computing space, computing overall is down, with the declines at storage or hard disk drive customers especially exacerbated by the flooding in Thailand. In the consumer products areas such as televisions and video games are also weak this quarter.

This story originally appeared at ZDNet's Between the Lines under the headline "Intel cuts sales outlook, blames hard drive shortage."

About the author

    Larry Dignan is editor in chief of ZDNet and editorial director of CNET's TechRepublic. He has covered the technology and financial-services industries since 1995.

     

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