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Intel Cuts Q4 Outlook Again, Blames Weak Demand Through OEMs, Distribution

Microprocessor giant Intel (NASDAQ: INTC ) blamed weak PC demand through its supply chain distributor and OEM channels for its second Q4 earnings warning since November. Analysts watching the PC supply chain said the announcement from Intel comes as no surprise. "Intel’s updated guidance reflects further weakness in end demand and inventory impacts as OEM […]

Written By

Jessica Davis

Jan 7, 2009

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Microprocessor giant Intel (NASDAQ:
INTC
) blamed weak PC demand through its supply chain distributor and OEM channels for
its second Q4 earnings warning since November.

Analysts watching the PC supply chain said the announcement from
Intel comes as no surprise.

"Intel’s updated guidance reflects further weakness in
end demand and inventory impacts as OEM and distributor customers work to lower
component and finished good inventories," says
FBR
Research in a brief report issued after Intel’s warning. "Remember that
our most recent PC channel checks suggested Q4 PC builds were set to fall 15
percent sequentially, while Q1 PC builds were set to fall 21 percent
sequentially."

The
FBR report notes that
Intel’s new forecast is still a few points worse than
FBR
had expected, "suggesting that some incremental estimate risk for Q1
remains."

Intel said in a statement issued Jan. 7 that it now expects
Q4 revenue of $8.2 billion, a decline of 20 percent sequentially and 23 percent
year over year. The company had issued a
similar dire Q4 earnings warning in November 2008.

The November warning had placed Q4 revenue at $9 billion,
plus or minus $300 million. That was
down from Intel’s original estimate of $10.1 billion to $10.9 billion.

Intel said that its gross margin estimate for Q4 will also
be "at the bottom of the previous expectation of 55 percent, plus or minus
a couple of points."

FBR Research says that
the steep drop in revenues may be followed by the announcement of more layoffs
during Intel’s Jan. 15 earnings call with analysts.

Intel offered, and a handful of channel executives accepted,
buyout offers from chipmaker in 2008, including Shirley Turner, director of
North American channel marketing and Nick Davison, director of North American
channel sales.

Intel also recently reportedly disbanded its channel
platform group, the unit within Intel charged with developing products
specifically for channel partners.

Intel Cuts Q4 Outlook Again, Blames Weak Demand Through OEMs, Distribution

Jessica Davis

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