Analyst blames other factors for Intel revenue warning

As we noted yesterday, Intel says recent shortages in the hard-drive market will cause it to miss its previous revenue estimate, but AMD’s CEO doesn’t seem nearly as worried. Is AMD being too optimistic, or is Intel using hard-drive shortages as an excuse to mask other problems? A research note recently quoted by EE Times points to the latter hypothesis.

Here’s the relevant nugget from the research note, which was released by Nomura Equity Research:

HDD shortages are a concern, but we think weak sell-through is also contributing to the $1 billion shortfall. We see softness in China, continued demand for ARM-based more power-efficient devices, and low volumes for ultrabooks.

We’ll have to see over the coming weeks whether other major chip vendors revise their financial forecasts, as well. That may prove or disprove the hypothesis better than any speculation or discussion could. Either way, it’s not every day Intel stumbles and cuts a billion bucks from its revenue forecast. The company is more known for record-breaking quarters and ever-growing gross margin.

Comments closed
    • Krogoth
    • 8 years ago

    The real reason why Intel is having issues is because the demand for more and more computing power is dropping as there is still no killer mainstream and game application that puts quad-cores of yesterday to their proverbial knees.

    The poor health of the global economy and recent HDD market crash are contributing factors as well.

    Tablets and Smartphone aren’t replacing PCs either. They are merely seizing up their own niches and are working along with PCs.

      • thefumigator
      • 8 years ago

      Exactly what I thought, I would enfasize the global economical crisis as main factor.
      Also, you can’t really sustain such revenue for so long. Its a peak. Every company has peaks. then they loose at sometime. Then the recover and start to make peaks of revenue again.

      So to me it will be going down because its time to go down.

        • raddude9
        • 8 years ago

        Thanks, “enfasize” brightened up my morning 🙂

        • sschaem
        • 8 years ago

        Is this how you explain how Intel revenue have been going up, way up, in the past 3 years during this global recession?

        Its going down because of the supply chain disruption from HDD supply & prices.

        Wait.. wait.. I have a better theory then yours : (Why trust Intel right)

        Its because Bulldozer is crushing them in the market place… yea thats it . 🙂

        Nothing to do with the HDD debacle at all, its all bulldozer fault!

      • DeadOfKnight
      • 8 years ago

      What’s wrong Krogoth? You don’t seem impressed.

      • End User
      • 8 years ago

      [quote<]Tablets and Smartphone aren't replacing PCs either.[/quote<] Of course they are.

        • Krogoth
        • 8 years ago

        Tablets and Smartphones cannot do any “real” work. The form factor is woefully inadequate and touchscreens are no substitute to a real keyboard/mouse setup. They are just fancy gadgets for casual stuff (looking up email, failbook, quick web searching, texting etc).

        PCs are getting smaller as well. You no longer need a full blown ATX, tower chassis to get full workstation capabilities. All-one-systems and SFF PCs are taking over the space that full-tower PCs use to dominate in.

          • End User
          • 8 years ago

          [quote<]Tablets and Smartphones cannot do any "real" work. [/quote<] Sigh. I remote manage servers from my phone. I call that real work.

            • Krogoth
            • 8 years ago

            Basic server administration can be done over a touchscreen, but anything more involved it becomes quite a headache.

            FYI, Real work = coding, publishing, writing novels/documentation/reports, A/V editing, accounting, web/graphical designing, CAD work, scientific apparatuses etc.

    • izmanq
    • 8 years ago

    Intel is known for it’s dirty marketing, i guess they team up with hard drive manufacturer to crank up the price, luckily AMD the good guy doesn’t play along, yayyyy, 😀 obviously i’m an AMD fan boy 😀 hehehe

      • Yeats
      • 8 years ago

      You get my nomination for Insipid Post of the Year.

      • axeman
      • 8 years ago

      I always thought Intel’s marketing was very well done, AMD’s just sucked. What stinks is some of Intel’s alleged business practices.

    • jdaven
    • 8 years ago

    Other factors that could affect Intel’s bottomline in the foreseeable future, huh? Well I can’t really think of many off the top of my head except:

    * Release of IBM architecture consoles (WiiU, Xbox Next, PS4) over the next two years that replace purchasing decisions for Intel based products

    * Less Intel CPUs in large supercomputer clusters as they are supplanted by GPGPU architectures from AMD and Nvidia

    * Consumers choosing smartphone and tablet ARM based products over Intel based products

    * The ever more likely death of the Itanic

    * Replacement of Intel architecture in traditional x86 devices with ARM architecture such as thin/light notebooks, Netbooks, Macbooks, blade servers, computing clusters, etc.

    * Competition from AMD (but don’t hold your breath on this one) on the whole SoC fusion front

    * Servers/workstations with SPARC processors that have a lot more marketing pull now that Oracle bought out Sun

    Those are just off the top of my head. Anyone else?

    EDIT: I thought of another one

    Homebrew microprocessors sponsored by China and Taiwanese governments to replace Intel in their supercomputers.

      • PeterD
      • 8 years ago

      Oh, no, there you’re wrong: China will simply replace computers by people. Much cheaper in China.

      • tfp
      • 8 years ago

      * Release of IBM architecture consoles (WiiU, Xbox Next, PS4) over the next two years that replace purchasing decisions for Intel based products

      Which console is using Intel X86 right now?

        • willmore
        • 8 years ago

        I think the idea is that a new console will improve their competence vs PCs and cost PC sales from people looking for a good gaming solution.

    • Buzzard44
    • 8 years ago

    It’s really amazing to me how quickly everyone wants to say “Intel is weak!” “The PC is dying!” “ARM is taking over!”

    $13.7 billion in a quarter is a ridiculous amount of revenue, even for Intel (and quite a nice chunk of profit too, with Intel’s margins). I mean, who thought that Intel would continue to beat it’s previous quarter’s earnings indefinitely? That’s not even possible.

    That being said, I wouldn’t mind if Intel stock would plummet so I could jump back in.

      • NeelyCam
      • 8 years ago

      It won’t go below $23; this is a perfect time to buy.

      * Europe is about to get its act together.
      * USA is about to get its act together.
      * HDD shortage only delays Intel’s revenue instead of reducing it.
      * HDD shortage in Q2/2012 will help Ivy Bridge Ultrabooks in the overall laptop market.
      * Intel-based cell phones will be announced in CES2012.
      * TSMC 28nm problems will help Intel 32nm cell phone chips to take market share from ARM chips.

        • ludi
        • 8 years ago

        Or, Europe could drag on for a while, and if it does, the US economy could likewise stay in the doldrums for a while, due to an overly strong dollar and loss of export markets.

        • tay
        • 8 years ago

        I don’t know about Europe, they could fuck it up completely. As it is I have too much exposure to Europe and am a bit gun-shy.
        Intel based cell phones running atom, i960, StrongARM? Wtf no. Maybe intel based Windows8 tablets.

        Do you think there is a reason TSMC can’t get its act together at 28nm? Does this mean that we will go through the same mess at 20nm?

          • NeelyCam
          • 8 years ago

          [quote<]Do you think there is a reason TSMC can't get its act together at 28nm? Does this mean that we will go through the same mess at 20nm?[/quote<] If I had to guess, I'd say it's the introduction of gate-last and HKMG at 28nm. Learning how to do new stuff with high yield is hard and takes time.

      • indeego
      • 8 years ago

      Lots of revenue and profit, but the moment there’s a downward trend you’ll see investors flee. Intel will keep acquiring companies with stable revenue to protect themselves here.

      • End User
      • 8 years ago

      Smartphones and tablets are giving us features that, in the past, have only been available via the PC. As mobile grows Intel will be further pressured by the competition.

    • Chrispy_
    • 8 years ago

    Intel: “boo hoo”
    “Weak sell-through”

    Seriously, sell-through is stronger at the moment. I had an advert for an off the shelf PC land in my inbox yesterday, where the current value of the 1TB hard drive in it was two-thirds the value of the whole system. If I had time to kill, I’d buy 20 of them and sell them as individual parts.

    “Continued demad for ARM-based….”

    Atom sucks on so many levels. You missed your chance, Intel, and you still haven’t addressed the enormous market for mobile devices. If you had a competetive product, maybe you’d be able to sell it in the current market. You don’t, so shut up, or put out a product that meets demand.

    “low volumes for ultrabooks”

    Maybe if the IGP’s were better than those in an E-350 netbook for half the cost, and if the screens weren’t lousy, low-contrast, cheap, low-resolution TN panels, people might be interested. But they’re not, because ultrabooks are still priced as premium products, yet they’re flawed and of inferior build quality to the competition. Average MBA buyers wouldn’t know the difference between Gigahertz and Gigabytes if it wasn’t summed up in a 1-5 star rating with primary-school explanations for what each is.

      • adisor19
      • 8 years ago

      Please don’t put the MBA in the same bunch with the other Ultrabooks. While the MBA does have a TN screen, it is far superior to the other Ultrabooks on the market. Just take a look at the reviews and you’ll see what i mean.

      Adi

        • izmanq
        • 8 years ago

        is the mind distortion field still on ? 😀

          • NeelyCam
          • 8 years ago

          Now that the active power source is disabled, it’s running on batteries… and they won’t last long.

            • Geistbar
            • 8 years ago

            I think adisor has his own renewable power source- not enough for the full effect, but he can keep himself covered.

          • End User
          • 8 years ago

          Yours is. Adi is right.

          • adisor19
          • 8 years ago

          I’m sorry, is something i said not true ? Have you read the reviews out there ? Which part are you having trouble with ?

          Adi

    • adisor19
    • 8 years ago

    Well well well, the truth finally comes out.

    It’s not the HDD shortage, it’s just increased competition from ARM SoCs and a crappy PC market. I’m glad someone sees through the whole HDD shortage BS.

    Adi

      • chuckula
      • 8 years ago

      You do realize that if the PC market is crappy then it will hurt Apple too right? (Adisor’s head asplodes)

        • PeterD
        • 8 years ago

        Anyway, shortage of HDD’s might lead to problems for people who want to buy a separate hdd, but why would it necessarily lead to problems to deliver pc’s?

          • Forge
          • 8 years ago

          Because computers with no hard disks don’t sell real well to the OEM-buying crowd?

        • Geistbar
        • 8 years ago

        Apple is more of a gadget company these days than a computer company- it’s why they changed their name however long ago to not include the “computer” part. While they still make a decent amount from their computer business, it’s also priced at the higher end, targeting people who are less price conscious.

        I disagree with adisor here, but Apple can realistically afford to toss their whole mac division overboard, so they’re more “resistant”, for lack of a better word, to a poor PC market.

          • beck2448
          • 8 years ago

          Actually Apple’s computer division is growing FASTER than the industry and even making inroads in the business market.

            • Geistbar
            • 8 years ago

            Yes, but that doesn’t change that their biggest money makers are the iGadgets. I did say they make a good chunk of change on their computers, but unlike the past, they aren’t reliant on that division at all, which was my point.

        • adisor19
        • 8 years ago

        Yes, I do. So what’s your point ?

        Adi

        • derFunkenstein
        • 8 years ago

        Apple’s consistently beaten overall growth, and grew when the overall PC market was shrinking. I don’t know what the deal is, but they seem all but immune right now.

        • End User
        • 8 years ago

        Really?

        [url<]http://cdn.macrumors.com/article-new/2011/10/gartner_3Q11_us.png[/url<]

      • Geistbar
      • 8 years ago

      Intel’s revised predictions for q4 2011 are $13.7 billion. In q4 2010 their revenue was $11.5 billion. If it was increased competition or a crappy PC market, they would be pretty unlikely to be increasing revenue by over $2 billion. The hard drive shortage is the simplest, best fitting reasoning for their revised revenue predictions.

      Intel has the most to lose from it because they own the largest share of the market, by quite a margin, I don’t see how it could be construed as “BS”, except you hoping ARM takes over because Apple relies more on ARM these days.

      Edit: Also, we’ve seen, again and again, on this site just how poor some analysts are at making predictions. If they’re any good at it, they’ll only tell the people paying them to make that prediction, so that those people can take the most advantage of their prediction. The ones making the headlines are generally trying to do just that- make the headlines.

        • Arag0n
        • 8 years ago

        I remember that AMD stated that most of OEM’s had HDD’s previous the flood, so the hit was going to be for Q1 not Q4…. for me it has sense that they missed expectations and they tried to get something else to blame..

          • Geistbar
          • 8 years ago

          Having a sufficient supply of hard drives doesn’t mean that there wouldn’t be pricing and sales changes as a result of the flood. The OEMs are going to be doling out their current crop of hard drives much more carefully than they normally would near a holiday season. Certainly, most of the pain will likely be felt in Q1, but it will still be there.

            • Arag0n
            • 8 years ago

            IMHO, Intel, Apple, MS and other big companies use to beat their forecast of earnings and income…. so it’s hard to believe that they decrease their expectations just for the flood… I think it’s not hard to think that they over-rated the ultrabook demand and other factors… I’m sure flood has something to do, but it’s not the only factor, just the one to blame…

        • Deanjo
        • 8 years ago

        [quote<]The hard drive shortage is the simplest, best fitting reasoning for their revised revenue predictions.[/quote<] I disagree with the notion that harddrive shortages are the main reason for falling short on their forecasts. While I do not agree it is solely from pressure of ARM, I believe it has more to do with the fact that going into this years holiday season, there are more things to take into consideration then previous years such as the tablet market boom, increased competition in the laptop market, the falling sales in the nettop market and an economy that has not recovered at all when it was expected to show signs of improvement. Last year intel had virtually no competition in the notebook/nettop market and the tablet market was just coming out.

          • Geistbar
          • 8 years ago

          The difference with those and the hard drive shortage though is that Intel’s own internal forecasting would have taken into account the tablet and smartphone markets, as those were known about long in advance of the beginning of q4. So long as those people are worth their salt, they could have done a decent job predicting how much revenue it’d take away from Intel- and being off by $2 billion would not fall under the “decent” umbrella. Perhaps Intel’s forecasting has a history of being wildly inaccurate before- I will admit to not bothering to hunt down and compare their forecasts for previous quarters, or previous fourth quarters, to the actual results.

          Opposing that, the hard drive shortage was something that could not be predicted before the floods. It was a sudden and unexpected event- they could not* have taken that into account when creating their forecasts. That is what makes the hard drive shortage the best fitting reasoning for their revised revenue expectations. The forecasts they make aren’t pulled out of thin air, and a sudden, huge event that has noticeable impacts on the computer industry is a very good, and simple, explanation, whereas not sufficiently taking into account various competitive markets that existed at the time of forecasting, is a more complex explanation. Occam’s razor would indicate it’s the simpler explanation.

          * Without psychic powers, time travel, or much more impressive & accurate (down to the little details) weather forecasting than exists in the present.

            • Deanjo
            • 8 years ago

            [quote<]Perhaps Intel's forecasting has a history of being wildly inaccurate before- I will admit to not bothering to hunt down and compare their forecasts for previous quarters, or previous fourth quarters, to the actual results.[/quote<] Over the last few years intel has routinely cut their quarter forecasts (at least once a year with the exception of 2007). 2006 [url<]http://www.eetimes.com/electronics-news/4060003/Intel-cuts-forecast-after-weak-quarter[/url<] 2008 [url<]http://www.pcworld.com/article/153772/intel_cuts_forecast_amid_broad_spending_slowdown.html[/url<] 2009 [url<]http://www.channelinsider.com/c/a/Intel/Intel-Cuts-Q4-Outlook-Again-Blames-Weak-Demand-Through-OEMs-Distribution/[/url<] 2010 [url<]http://www.marketwatch.com/story/intel-cuts-sales-view-on-weak-consumer-pc-demand-2010-08-27[/url<]

            • Geistbar
            • 8 years ago

            The 2008 and 2009 forecasts you linked to both covered Q4 2008, which was the only cut on a similar scale to this one, at ~1 billion dollars. That leaves 3 prior occurrences (that you linked to, at least) in the past 5 years- or about 1/7 of the time. Not really a bad batting average. Not perfect either. Doesn’t change the main focus of my argument either way, that the competition would be known about in advance, while the Thai floods would not.

            I must admit my “$2 billion” number in the prior post was a miss-thought, using the revised number for this year compared to the actual of last year, instead of from the pre-revised q4 to the revised q4.

      • Yeats
      • 8 years ago

      So…. one source’s [i<]opinion[/i<] = the truth? Wow, are your standards low.

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