Chip maker sees weak demand, market shares loss as reasons to cut 1st-quarter outlook.
By Amanda Cantrell, CNNMoney.com staff writer
March 3, 2006: 10:20 AM EST
NEW YORK (CNNMoney.com) - Intel warned investors Friday that sales for the current quarter will fall short of an earlier forecast because of weaker-than-expected demand and what it called a "slight" market share loss.
The No. 1 chipmaker said it's now expecting revenue to fall between $8.7 billion and $9.1 billion, short of the $9.1-$9.7 billion range forecast when it reported financial results in January that also missed Wall Street expectations.
Intel said the revenue shortfall will adversely impact its gross margin, a key measure of profitability. The company said expenses will likely be lower than previously forecast because of lower revenue- and profit-related spending.
Intel (Research) stock sank about 1.5 percent in early Nasdaq trading. The company is due to report its first-quarter financial results on April 19.
"This was a holdover reverberation from problems we already know about," said Cody Acree, an analyst with Stifel Nicolaus. "This is a larger disappointment than we expected, but it's not a change in what we and most of the Street already knew was coming."
Acree said Intel is dealing with clearing out inventories of older chips while it struggles with short supplies of the pairs of chips it needs for newer microprocessors.
Intel has also been hurt by late deliveries from some outside suppliers and market share losses to rival Advanced Micro Devices (Research).
