Hard Drive Shortages Knock $1B USD Off Intel's Bottom Line
December 13, 2011 10:45 AM
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. (
), the world's largest maker of personal computer central processing units, would be celebrating. Instead its financial staff are reporting some unpleasant news.
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.
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.
"And boy have we patented it!" -- Steve Jobs, Macworld 2007
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