Intel Raises Third-Quarter Revenue and Gross Margin Expectations
SANTA CLARA, Calif.--(BUSINESS WIRE)-- As a result of stronger than expected demand for microprocessors and chipsets, Intel Corporation now expects revenue for the third quarter to be $9.0 billion, plus or minus $200 million, as compared to the previous range of $8.5 billion, plus or minus $400 million.
The gross margin percentage for the third quarter is expected to be in the upper half of the previous range of 53 percent, plus or minus two percentage points. All other expectations are unchanged.
Intel's third-quarter Business Outlook was originally published in the company's second-quarter 2009 earnings release, available at intc.com. The company is scheduled to report its third-quarter financial results on Oct. 13.
Status of Business Outlook
Through Aug. 31, 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 Aug. 31 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 press releases and filings with the SEC should be considered to be historical, speaking as of prior to the Quiet Period only and not subject to an update by the company.
Risk Factors
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.
-- Ongoing uncertainty in global economic conditions poses a risk to the
overall economy as consumers and businesses may defer purchases in
response to tighter credit and negative financial news, which could
negatively affect product demand and other related matters.
Consequently, demand could be different from Intel's expectations due to
factors including changes in business and economic conditions, including
conditions in the credit market that could affect consumer confidence;
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 new 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; 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; capacity utilization; start-up
costs, including costs associated with the new 32nm process technology;
variations in inventory valuation, including variations related to the
timing of qualifying products for sale; excess or obsolete inventory;
product mix and pricing; manufacturing yields; changes in unit costs;
impairments of long-lived assets, including manufacturing, assembly/test
and intangible assets; and the timing and execution of the manufacturing
ramp and associated costs.
-- 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
profits.
-- 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 tax
assets.
-- The current financial stress affecting the banking system and financial
markets and the going concern threats to investment banks and other
financial institutions have resulted in a tightening in the credit
markets, a reduced level of liquidity in many financial markets, and
heightened volatility in fixed income, credit and equity markets. There
could be a number of follow-on effects from the credit crisis on Intel's
business, including insolvency of key suppliers resulting in product
delays; inability of customers to obtain credit to finance purchases of
our products and/or customer insolvencies; counterparty failures
negatively impacting our treasury operations; increased expense or
inability to obtain short-term financing of Intel's operations from the
issuance of commercial paper; and increased impairments from the
inability of investee companies to obtain financing. Gains or losses
from equity securities and interest and other could also vary from
expectations depending on gains or losses realized on the sale or
exchange of securities; gains or losses from equity method investments;
impairment charges related to debt securities as well as equity and
other investments; interest rates; cash balances; and changes in fair
value of derivative instruments. The current volatility in the financial
markets and overall economic uncertainty increases the risk that the
actual amounts realized in the future on our debt and equity investments
will differ significantly from the fair values currently assigned to
them.
-- The majority of our 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 our 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 rates.
-- 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.
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 fiscal quarter ended June 27, 2009.
Intel (NASDAQ:INTC), the world leader in silicon innovation, develops technologies, products and initiatives to continually advance how people work and live. Additional information about Intel is available at www.intel.com/pressroom and blogs.intel.com.
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Source: Intel Corporation
Released Aug 28, 2009 • 9:00 AM EDT