Intel Lowers First-Quarter Gross Margin Forecast Due to Lower NAND Flash Memory Prices
All Other Business Expectations Unchanged
SANTA CLARA, Calif.--(BUSINESS WIRE)--
Intel Corporation today lowered its first-quarter gross margin forecast to 54 percent, plus or minus a point, as compared to the previous forecast of 56 percent, plus or minus a couple of points, due to lower than expected prices for NAND flash memory chips. All other expectations are consistent with the first-quarter Business Outlook published in the company's fourth quarter 2007 earnings release, available at www.intc.com.
Status of Business Outlook
During the remainder of the week, 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 March 7 until publication of the company's first-quarter 2008 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 first quarter and the future involve a number of risks and uncertainties. Many factors could cause Intel's actual results to differ materially from current expectations, including the following:
-- 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's results could be affected by the timing of
closing of acquisitions and divestitures.
-- 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 45nm 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; Intel's ability to respond quickly to technological
developments and to incorporate new features into its
products; and the availability of sufficient components from
suppliers to meet demand.
-- The gross margin percentage could vary significantly from
expectations based on changes in revenue levels; product mix
and pricing; capacity utilization; 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; and the timing and execution of the
manufacturing ramp and associated costs, including start-up
costs.
-- Expenses, particularly certain marketing and compensation
expenses, vary depending on the level of demand for Intel's
products, the level of revenue and profits, and impairments of
long-lived assets.
-- Intel is in the midst of a structure and efficiency program
that is resulting in several actions that could have an impact
on expected expense levels and gross margin. Intel is also in
the midst of forming Numonyx, a private, independent
semiconductor company, together with STMicroelectronics N.V.
and Francisco Partners L.P. A change in the financial
performance of the contributed businesses could have a
negative impact on our financial statements. Intel's equity
proportion of the new company's results will be reflected on
its financial statements below operating income and with a one
quarter lag. The results could have a negative impact on
Intel's overall financial results.
-- 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.
-- Gains or losses from equity securities and interest and other
could vary from expectations depending on fixed income and
equity market volatility; gains or losses realized on the sale
or exchange of securities; gains or losses from equity method
investments; impairment charges related to marketable,
non-marketable and other investments; interest rates; cash
balances; and changes in fair value of derivative instruments.
-- Intel's results could be affected by the amount, type, and
valuation of share-based awards granted as well as the amount
of awards cancelled due to employee turnover and the timing of
award exercises by employees.
-- Intel's results could be impacted by adverse economic, social,
political and physical/infrastructure conditions in the
countries in which 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-K for the fiscal year ended December 29, 2007.
Intel, 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 at blogs.intel.com.
Intel and the Intel logo are trademarks of Intel Corporation in the United States and other countries.
Source: Intel Corporation
Released Mar 3, 2008 • 6:20 PM EST