Intel trims third-quarter revenue forecast

We don’t usually see Intel miss its revenue targets, but apparently, that’s what’s going to happen this quarter. The chipmaker announced this morning that it’s lowered its official forecast for both revenue and gross margin.

Intel now expects third-quarter revenue of $13.2 billion, below the previously anticipated range of $13.8-14.8 billion. The company also says its gross margin will be 62% "plus or minus one percentage point," down from 63% "plus or minus a couple of percentage points" (translation: 61-63% instead of 61-65%).

What went wrong? Intel blames "weaker than expected demand in a challenging macroeconomic environment." It adds:

Relative to the prior forecast, the company is seeing customers reducing inventory in the supply chain versus the normal growth in third-quarter inventory; softness in the enterprise PC market segment; and slowing emerging market demand. The data center business is meeting expectations.

Intel shares slumped by a few points on the news, but it doesn’t sound like the Street is entirely surprised. Cody Acree, an analyst for Williams Financial Group, told Reuters this morning, "Everybody up and down the food chain has been saying this. Intel was one of the last hold-outs . . . The assumption was not whether they’d preannounce but to what degree."

Comments closed
    • ronch
    • 7 years ago

    I suppose AMD was right all along. We do have enough computing power. Nobody’s buying those faster i5’s and i7’s anymore. Trinity is good enough.

    // sarcasm

      • Krogoth
      • 7 years ago

      AMD is correct for the most part.

      SB and IB-based i5s and i7s are not Intel’s largest sellers. Intel is making most of its revenue off their i3s and rebranded Pentiums via sheer volume. They also know that they need something to go against ARM in the ultra-portables and embedded markets.

      Desktops aren’t as big of a seller as they used to be. The mainstream crowd are into the portable devices.

        • djgandy
        • 7 years ago

        Except you forget people have to go to work and toy tablets are relatively useless for anyone in industries creating wealth.

    • oldog
    • 7 years ago

    Everyone knows that American corporations only care about profits. So who cares if both Intel and AMD go broke.

    The US government or the EU is perfectly capable of starting a fab company (sarcasm).

      • NeelyCam
      • 7 years ago

      That’s right. AMD/GloFo/Intel fabs? They didn’t build those!

    • flip-mode
    • 7 years ago

    If Intel has to ‘trim’, then AMD is probably going to have to significantly cut. It’s always worse for AMD.

    • Unknown-Error
    • 7 years ago

    This actually makes me worry a lot more about AMD. Barely made a profit last quarter.

    • MarkD
    • 7 years ago

    Maybe we were waiting for the i3 Ivy Bridge processors we knew were coming? I know, it’s just a drop in the bucket, but I’d want a fairly steep discount to buy the previous model of anything when newer, faster, better, more is just around the corner.

    • WillBach
    • 7 years ago

    This is supposedly due to weak enterprise spending (which had previously been strong) more than continuing weak consumer spending. I’m more worried about what that says about the state of the global economy; businesses were investing in servers even when things looked really bad, and now they’re not.

      • sschaem
      • 7 years ago

      “The data center business is meeting expectations.”

      Its the third world and OEM that are reducing inventory…

      The industry is getting ready for the windows8 train wreck next month.

        • phileasfogg
        • 7 years ago

        I hardly think the phrase ‘third world’ is relevant in this century. Not only is it politically and economically patronizing, it’s also not nearly as true today as it was 10-20 years ago. I recently read a headline that said 15% of the US population is eligible for and using food stamps. Does that make 1/6 of the US a 3rd world country?

          • WillBach
          • 7 years ago

          ‘Third World’ is a binary state based on Cold War history. It can be used in a patronizing way, and frequently is, but historically referred to nations not aligned with Western or Eastern strategic interests.
          [list<] [*<]First World was NATO. [/*<][*<]Second World was Warsaw Pact or aligned with USSR [/*<][*<]Third World was other.[/*<] [/list<] Its meaning has changed as the nations making up the Third World have changed, but it doesn't become less true that, India, for example, was considered non-aligned thirty years ago.

            • NeelyCam
            • 7 years ago

            Heh, Sweden is a third world country 🙂

      • trackerben
      • 7 years ago

      Let’s just see the headlines ending in “crisis”.

      US Government near-term fiscal cliff. USG long-term deficit spending. USG and State pensions debt. EU sovereign debt. EU intra-state lendings. EU monetary fissuring. China state loans. Japan long-term deficit spending. Spain estate bubble. Turkey sovereign debt. India sovereign debt. Canada estates bubble. Australia estates bubble. Brazil estates bubble. Global bonds market. Emerging sovereign bonds risk. Globalized stagflation. Global premium estates crush.

      The tendency of global sovereigns to borrow or to encourage borrowing against future returns, like the US borrowings of $5trillion and inflationary monetary strategy, is a sign of the times. So is the tendency of global corporates to build up distributed cash reserves against future risks, of which Apple’s cash hoard is only the most famous example.

      Intel is only one of the biggest fish in the cooking pot. it just took longer for it to feel the rising heat.

    • yogibbear
    • 7 years ago

    I wonder if people would fund a kickstarter for Intel’s Q3 profits?

    • jdaven
    • 7 years ago

    As much as I could blame the smartphone/tablet ARM rise or the slow global economic growth, I bet that the most important factor is that PC hardware from all sides (Intel, AMD/ATI, Nvidia, etc) has been fast enough for years. There is not much need for users to upgrade. Only new customers in emerging countries entering the market.

      • blastdoor
      • 7 years ago

      I’m sure that’s an important part of it.

      The only really compelling computer hardware upgrade that’s been introduced since dual core CPUs is the SSD.

    • ronch
    • 7 years ago

    Complete the following sentence:

    Intel trims forecasts while AMD _______________.

      • Farting Bob
      • 7 years ago

      Curls up into the fetal position.

      • chuckula
      • 7 years ago

      Orders Chinese carry-out?

      • yogibbear
      • 7 years ago

      wins lawsuits against Intel and DOUBLES their profits! (Then realises this is why Intel were “trimming” and cries itself to sleep)

      • indeego
      • 7 years ago

      Announces they are ATI.

      • phileasfogg
      • 7 years ago

      fiddles?

    • dpaus
    • 7 years ago

    I hope Neely has his Valium [i<]before[/i<] he logs in this morning....

      • NeelyCam
      • 7 years ago

      I only use harder stuff

        • dpaus
        • 7 years ago

        Well, that explains a lot….

      • anotherengineer
      • 7 years ago

      This is Neely’s fault for ‘waiting’ for Haswell 😉

        • dpaus
        • 7 years ago

        It’s Neely’s fault for making that Medfield bet with me. This is the beer-and-wings Karma God striking him down. See, now [i<]there's[/i<] a deity with a sense of humour 🙂

          • chuckula
          • 7 years ago

          Neely was definitely… shall we say.. optimistic in that bet.

          This site has a whole spectrum of opinions from the “it’s physically impossible for x86 to run in a cell phone!” (rather silly when Medfield phones are shipping) all the way to Neely’s “Intel will have 50% smartphone marketshare in 2014!” (yeah… not going to happen either).

          Can Intel compete in the smartphone market? Sure it can, and I think it will eventually have a good slice (but by no means a dominant slice) of the action. Intel’s biggest barriers are less technological and more bureaucratic, especially with its fears that improved low-end chips will eat margins of higher-end chips. The potential market is so big that there are plenty of opportunities for ARM + licensees and Intel to make lots of money.

            • NeelyCam
            • 7 years ago

            You know, I just realized that, in order to get >50% of market share, Intel chips would have to be in Samsung phones…

            I’m staring to feel that I don’t really have a chance to win that bet.

            Oh well, as long as Intel has 10% at the end of 2013, it’s a wash, and I don’t have to fund dpaus’ beer induced stupor

            • James296
            • 7 years ago

            could be worse

            • dpaus
            • 7 years ago

            Clearly, you’ve never seen me drink beer. Neely’s in big trouble, and he knows it.

    • Goty
    • 7 years ago

    Oh noes! They’re doomed! They won’t survive another quarter!

    Wait, this isn’t an AMD post? Ah… nevermind.

      • UberGerbil
      • 7 years ago

      Remember the P4 era, when some clueless people were literally saying this?

        • yogibbear
        • 7 years ago

        But but but they WERE doomed! Doomed to forever be haunted by their mistakes! And spur them into creating the most successful chip business ever.

          • bitcat70
          • 7 years ago

          Nah, Microshaft did that

    • chuckula
    • 7 years ago

    Not good, but relatively speaking, not a disaster either. When even ARM is warning about weakness in cheaper devices, there’s no way to completely avoid the pain.

      • blastdoor
      • 7 years ago

      The fact that ARM and Intel are experiencing this really does support the idea that it’s macroeconomics, not one type of device taking share from another (although that might be happening too).

        • NeelyCam
        • 7 years ago

        Yep, Intel is eating into ARM marketshare

          • jdaven
          • 7 years ago

          Man, you are really smoking something.

            • NeelyCam
            • 7 years ago

            No, you are. If Intel has ANY smartphone shipments, it’s already eating into ARM marketshare (that used to be 100%)

            This math is so easy even you should be able to do it

            • willmore
            • 7 years ago

            So it’s a zero sum game? Really? Take any economics?

            • NeelyCam
            • 7 years ago

            It’s math. Geez… it’s really not that hard.

            100% marketshare -> 98% market share. 2% goes to Intel.

            And yes; I’ve taken economics. Have you taken Math?

            • kalelovil
            • 7 years ago

            ARM has already eaten most of Intel’s tablet marketshare while Intel has been spending considerable sums attempting to nibble at ARM’s smartphone marketshare with almost nothing to show for it.

            There are more MIPS-based smartphones and Android devices than there are Intel-based ones.

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