Intel: Fourth quarter sales worse than expected (again)
Updated: Intel said Wednesday that its fourth quarter, which was already dismal, was actually worse than expected.
The chip giant forecast fourth quarter revenue of $8.2 billion, down 20 percent from the third quarter and 23 percent from a year ago. Intel warned about the fourth quarter in November and forecast sales of about $9 billion. Before Intel's previous warning, analysts were expecting fourth quarter revenue north of $10 billion. That's a $2 billion revenue shortfall in two months.
In a statement, Intel cited "further weakness in end demand and inventory reductions by its customers in the global PC supply chain."
Other guidance from Intel included:
- Fourth quarter margins is at the low end of the 55 percent range Intel provided give or take a few percent;
- Intel will take a non-cash charge of $950 million related to its Clearwire investment. Investment losses will be between $1.1 billion and $1.2 billion compared to an expected loss of $50 million.
- R&D spending will be $2.6 billion, down from previous guidance of $2.8 billion.
- Intel will take restructuring charges of $250 million, in line with expectations.
Intel shares were down about 5 percent in early trading.
Update: The reaction to Intel's miss was relative positive all things considered. Why? Analysts were expecting a train wreck. Citi analyst Glen Yeung says in a research note:
We had been anticipating a shortfall, modeling 4Q08 down 17%, below even the low-end of Intel’s guidance, and in this regard are not completely shocked by Intel’s pre-announcement. Recent data points from notebook ODM’s and motherboard makers have been noticeably negative, substantiating such a shortfall. The miss, however, comes after Intel had established its earnings date, and may destroy any false hope that may have arisen on the premise that the earnings date signaled they had made the quarter.