Weakness in the global economy will hurt third quarter sales at Intel Corp. (Nasdaq: INTC), and the company is now projecting revenue for the period will be up about $300 million below the midpoint of its previous forecast.
Intel, the world's biggest semiconductor company and a bellwether for the industry, said the lower forecast was due to problems in the general economy. The company has been making up for weakness in the developed countries by tapping growth markets in Asia and emerging regions, but as demand softens in these areas too, sales of personal computers, which account for a bulk of Intel's revenue, have also declined.
"As we enter the third quarter, our growth will be slower than we anticipated due to a more challenging macroeconomic environment," Paul Otellini, president and CEO at Intel, said in a statement.
The company projects third quarter revenue will be approximately $14.3 billion, "plus or minus $500 million" compared with its previous estimate for a midrange of $14.6 billion. It expects gross profit margin will be about 63 percent for the quarter. Full year revenue will be "up between 3 percent and 5 percent year over year, down from the prior expectation for high single-digit growth," the company said in the statement.
For the second quarter, Intel reported net income of $2.83 billion, or 54 cents per share, down from $2.95 billion, in the comparable quarter of 2011. Revenue rose slightly to $13.5 billion from $13 billion. Analysts had expected the company to report earnings per share of 52 cents for the second quarter. Sales were in line with analysts' consensus estimate.
Intel said it will maintain its previous capital spending estimate of $12.5 billion, "plus or minus $400 million," for the full year.
@_hm: haven't that insight or something similar, but speaking for myself it could be a good, potentially, a good strategy; some doubts or timeplan for its "go live" and for absorbing the step from the market; other poit is about sales regression, in general, the indicator acts as ringing bell for business, it appears economy's positive trend is still away.
If Intel's revenue is $300 million below the midpoint of its previous forecast, it is likely that the company's analysts failed to understand the right economy context in which they are doing business and they should rather blame themselves. But the good news is that the company is still expecting a 63 percent profit margin for the quarter, supposing they get it right this time.
"it appears economy's positive trend is still away."
Most analysts know that the economic recovery is still slow and companies should take that into account in their revenue earning forecasts. It is predicatable that the global tough economy will affect companies' revenues.
@H_H: well, yes, you are absolutely right; I am wondering if, for similar condition, companies need to hire very talented people very experienced in predicting and then delivering the expected forecast, avoiding any negative trend in reviewing it. It could be a key factor also for jobs market.
I heard art of this report on the radio on the way to wotk this morning. If I heard correctly, part of last years growth was due to acquisition. It would be interesting to see if the growth is more constant year over year if that was taken out of the comparison.
Well everyone is blaming the economy and its fair enough upto some extent since its really tough for small and medium scaled companies to get their selves in the act on time but we should be much more proactive and shoyuld learn how to deal with situations like this and should have back up plans to overcome atleast some percentage
@_hm: as per what major newspapers are reporting, Microsoft8 is bringing high expectations for both endusers and market, then yes, finally, it could represent a key event also for Intel for starting again a positive ramp on forecast and financial results by the end of the year.
The forecasts from companies like Intel are largely about managing expectations. It's probably best to regard them with some skepticism. Maybe they are revising downward only to revise upward later, e.g. to coincide with a stock offering from a competitor.
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Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
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Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
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