Intel's Third-Quarter Below Expectations
SANTA CLARA, Calif., Aug 27, 2010 (BUSINESS WIRE) -- Intel Corporation today announced that third-quarter revenue will be
below the company's previous outlook. The company now expects
third-quarter revenue to be $11.0 billion, plus or minus $200 million,
compared to the previous expectation of between $11.2 and $12.0 billion.
Revenue is being affected by weaker than expected demand for consumer
PCs in mature markets. Inventories across the supply chain appear to be
in-line with the company's revised expectations.
The company's expectation for third-quarter gross margin is now 66
percent, plus or minus a point, lower than the previous expectation of
67 percent, plus or minus a couple of points. The impact of lower volume
is being partially offset by slightly higher average selling prices
stemming from solid enterprise demand.
Equity Investments, Interest and Other is expected to be $175 million,
consistent with the company's revised expectation reported on Form 8-K
filed July 16.
All other expectations for the third quarter remain unchanged. The
outlook for the third quarter does not include the effect of any
acquisitions, divestitures or similar transactions that may be completed
after Aug. 26.
The company will update fourth-quarter and full-year expectations with
its third-quarter earnings report on Oct. 12.
Status of Business Outlook
During the quarter, Intel's corporate representatives may reiterate the
Business Outlook during private meetings with investors, investment
analysts, the media and others. From the close of business on Sep. 3
until publication of the company's third-quarter earnings release, Intel
will observe a "Quiet Period" during which the Business Outlook
disclosed in the company's news releases and filings with the SEC should
be considered as historical, speaking as of prior to the Quiet Period
only and not subject to an update by the company.
The above statements and any others in this document that refer to plans
and expectations for the third quarter, the year and the future are
forward-looking statements that involve a number of risks and
uncertainties. Many factors could affect Intel's actual results, and
variances from Intel's current expectations regarding such factors could
cause actual results to differ materially from those expressed in these
forward-looking statements. Intel presently considers the following to
be the important factors that could cause actual results to differ
materially from the corporation's expectations.
Demand could be different from Intel's expectations due to factors
including changes in business and economic conditions; customer
acceptance of Intel's and competitors' products; changes in customer
order patterns including order cancellations; and changes in the level
of inventory at customers.
Intel operates in intensely competitive industries that are
characterized by a high percentage of costs that are fixed or
difficult to reduce in the short term and product demand that is
highly variable and difficult to forecast. Additionally, Intel is in
the process of transitioning to its next generation of products on
32nm process technology, and there could be execution issues
associated with these changes, including product defects and errata
along with lower than anticipated manufacturing yields. Revenue
and the gross margin percentage are affected by the timing of Intel
product introductions and the demand for and market acceptance of
Intel's products; actions taken by Intel's competitors, including
product offerings and introductions, marketing programs and pricing
pressures and Intel's response to such actions; defects or disruptions
in the supply of materials or resources; and Intel's ability to
respond quickly to technological developments and to incorporate new
features into its products.
The gross margin percentage could vary significantly from expectations
based on changes in revenue levels; product mix and pricing; start-up
costs; variations in inventory valuation, including variations related
to the timing of qualifying products for sale; excess or obsolete
inventory; manufacturing yields; changes in unit costs; impairments of
long-lived assets, including manufacturing, assembly/test and
intangible assets; the timing and execution of the manufacturing ramp
and associated costs; and capacity utilization.
Expenses, particularly certain marketing and compensation expenses, as
well as restructuring and asset impairment charges, vary depending on
the level of demand for Intel's products and the level of revenue and
The tax rate expectation is based on current tax law and current
expected income. The tax rate may be affected by the jurisdictions in
which profits are determined to be earned and taxed; changes in the
estimates of credits, benefits and deductions; the resolution of
issues arising from tax audits with various tax authorities, including
payment of interest and penalties; and the ability to realize deferred
Gains or losses from equity securities and interest and other could
vary from expectations depending on gains or losses on the sale,
exchange, change in the fair value or impairments of debt and equity
investments; interest rates; cash balances; and changes in fair value
of derivative instruments.
The majority of Intel's non-marketable equity investment portfolio
balance is concentrated in companies in the flash memory market
segment, and declines in this market segment or changes in
management's plans with respect to Intel's investments in this market
segment could result in significant impairment charges, impacting
restructuring charges as well as gains/losses on equity investments
and interest and other.
Intel's results could be impacted by adverse economic, social,
political and physical/infrastructure conditions in countries where
Intel, its customers or its suppliers operate, including military
conflict and other security risks, natural disasters, infrastructure
disruptions, health concerns and fluctuations in currency exchange
Intel's results could be affected by the timing of closing of
acquisitions and divestitures.
Intel's results could be affected by adverse effects associated with
product defects and errata (deviations from published specifications),
and by litigation or regulatory matters involving intellectual
property, stockholder, consumer, antitrust and other issues, such as
the litigation and regulatory matters described in Intel's SEC
reports. An unfavorable ruling could include monetary damages or an
injunction prohibiting us from manufacturing or selling one or more
products, precluding particular business practices, impacting Intel's
ability to design its products, or requiring other remedies such as
compulsory licensing of intellectual property.
A detailed discussion of these and other factors that could affect
Intel's results is included in Intel's SEC filings, including the report
on Form 10-Q for the quarter ended June 26, 2010.
Intel (NASDAQ: INTC) is a world leader in computing innovation. The
company designs and builds the essential technologies that serve as the
foundation for the world's computing devices. Additional information
about Intel is available at www.intel.com/pressroom
Intel and the Intel logo are trademarks of Intel Corporation in the
United States and other countries.
* Other names and brands may be claimed as the property of others.
SOURCE: Intel Corporation
Mark Henninger, 408-653-9944 (Investor Relations)
Amy Kircos, 480-552-8803 (Media Relations)
Copyright Business Wire 2010