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Intel will likely receive boost in opposite direction once shortage ceases and OEMs rebuild their inventories

Globally, personal computer sales and market demand continues to rise, posting their fourth consecutive quarter of growth.  You'd think Intel Corp. (INTC), the world's largest maker of personal computer central processing units, would be celebrating.  Instead its financial staff are reporting some unpleasant news.

Intel announced yesterday that it was dropping its outlook for fourth-quarter revenue from $14.7B±$500M USD to $13.7B±$300M.  GAAP and non-GAAP gross margins also dropped half a percentage point.  The cuts were due to shrinking microprocessor sales.

It turns out that the recent flooding which ravaged Vietnam, producers of one quarter of the world's hard drives, is still sending shockwaves through the personal computing market.  Hard drive shortages have hit the OEMs hard.  As they can't build computers without hard drives, they've turned to pushing much of their backup inventories onto the market.

wet hard drive

Meanwhile, the OEMs have cut their CPU orders from Intel to lower levels.  Sales won't be restored until the hard drive supply picks up again and the OEMs begin to rebuild their inventories.  

The good news is that Intel could enjoy a very strong H1 2012, the exepcted timeframe where the hard drive market will return to normalcy.  OEMs will be trying to build up their stock, while meeting the growing demand at the same time, and that adds up to a lot of component purchases.

In that sense, this revenue drop looks be more of a deferment that a true loss of business.  That said, it is still a painful one for Intel's investors.  The company's stock fell  1 a quarter percent following the news, which aired lated yesterday.

Source: Intel


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I'm not convinced
By bug77 on 12/13/2011 11:18:06 AM , Rating: 2
Sure, pricier HDDs mean less computers sold, but it also means more computers sold with an SSD. $1B hit seem a bit of a stretch to blame on the flooding.




RE: I'm not convinced
By Samus on 12/13/2011 11:51:11 AM , Rating: 2
I completely agree.

It's pretty obvious Tablet sales and AMD 'Fusion' E350-E450 and C50/C60 sales have hit Intel's bottom line in that less computers overall were sold (because Tablets are denting PC sales) and Intel has no competitive solution for the $300-$500 price segment. If you are lucky, you might land a low-end i3 at that price, but most laptops, especially sold on BF, were AMD laptops.


RE: I'm not convinced
By IntelUser2000 on 12/14/2011 1:28:18 AM , Rating: 2
It's said that the Thailand flood can affect 30% of the entire HDD supply.

Imagine what happens to AMD that are only in bottom-barrel pricing systems that almost always use HDD, if Intel with much more diversified lines are impacted like this.

The cheapest laptop in Newegg is a $379 one that's based on Pentium with Sandy Bridge core. That'll kick ass of E-350/E-450 in both CPU AND graphics performance.

So AMD loses not only because Intel has a formidable lineup even in the low end, but again because of this HDD shortage.

What about the Tablet market?

Say what? It's actually an "iPad" market?

Delusional people are delusional.


RE: I'm not convinced
By Samus on 12/21/2011 4:16:11 PM , Rating: 2
Your name makes your post biased and irrelevant. Try, try again.


"It's okay. The scenarios aren't that clear. But it's good looking. [Steve Jobs] does good design, and [the iPad] is absolutely a good example of that." -- Bill Gates on the Apple iPad











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