Intel narrows its revenue projections
The chip giant and industry bellwether trims the revenue outlook of its previous forecast, saying demand for its chips has been at the "lower end" of traditional seasonal patterns.
The industry bellwether said in its traditional midquarter update that it would turn in revenue of between $8 billion and $8.2 billion for the quarter, as opposed to its previous forecast of revenue between $7.9 billion and $8.5 billion, set during its fourth-quarter 2003 financial report in January.
The update moves the midpoint of Intel's revenue guidance--a figure analysts generally use as a de facto revenue estimate for the company--to $8.1 billion from $8.2 billion.
Before the update, many financial analysts had been expecting Intel to adjust the midpoint upward slightly, to about $8.3 billion. A survey of 28 analysts surveyed predicted that on average Intel would report revenue of $8.27 billion for the quarter, according to Thompson First Call.
Intel Chief Financial Officer Andy Bryant said in a conference call that the decline was due largely to a slight build-up of inventory in the Asia-Pacific and Japanese markets in the fourth quarter, which slightly retarded sales in the first quarter. Still, first-quarter revenue will likely be close to 20 percent higher from the same period the year before, he said.
Bryant added that the build-up of stocks has been erased.
"The little bit of inventory overhang was small in the scheme of things," he said. "Europe is continuing to do well for us, and North America appeared to do well in the last half of the year for us."
Flash memory sales also improved for "the first time in four quarters," Bryant said.
Bryant wouldn't comment on Intel's expectations for the second quarter, but said that revenue typically drops from 2 percent to 4 percent from the first quarter and that the annual forecasts have not changed.
During the first quarter of 2003, Intel reported revenue of $6.8 billion, turning in a profit of 14 cents per share.
Typically the market for PC chips declines by about 5 percent sequentially on a unit basis from the first quarter to the fourth quarter, said Dean McCarron, analyst with Mercury Research. If revenue hits $8.2 billion, it will represent a 7 percent decline.
"The general rumor has been that things are just a little weaker than seasonal. The more specific stuff I've been hearing seems to be pointing at mobile as being weaker in sales," said Dean McCarron, analyst with Mercury Research. "Certainly what (Intel is) saying is consistent with what I've seen in the market for the quarter so far."
Notebook PC inventory has also been a little higher than normal at retail in the United States, according to NPD Techworld. That firm's figures showed seven weeks of inventory in January versus the normal four to six weeks, although NPD analyst Steve Baker said the situation could have been a lot worse and that sales and prices have generally been holding up.
Intel's fortunes often ride on the tide of the PC market, as most of the company's revenue is derived from its Intel Architecture Group, which produces PC processors such as the Pentium 4 and Pentium M as well as chipsets and motherboards.
During 2003,
Still, analysts expect that market to pick up this year. IDC and Gartner have each forecast double-digit unit shipment increases for the worldwide PC market for 2004. Gartner's most recent prediction, released in February, said worldwide PC shipments will reach 187 million units in 2004, a 13.9 percent increase from 2003. IDC's latest forecast predicts that worldwide PC shipments will increase by 11.4 percent to 170 million in 2004.
CNET News.com's Michael Kanellos contributed to this report.