Wednesday, January 7, 2009
Intel Corp. says its fourth quarter 2008 revenue fell a hefty 20 percent on a sequential basis and 23 percent from the comparable year-ago period due to soft end-equipment demand and inventory correction actions taken by customers towards the end of the year.
The Santa Clara, Calif.-based company is scheduled to formally announce fourth quarter results on January 15 and did not provide updated guidance for net income and earnings per share.
Intel and other semiconductor companies experienced a sharp pullback in orders during the fourth quarter and the severe decline in the company's estimated fourth quarter revenue indicates sales probably worsened even much more than expected throughout the IC market as 2008 drew to a close.
Initially, Intel had expected fourth quarter revenue would be between $10.1 billion and $10.9 billion with gross margin as high as 59 percent "plus or minus a couple of points."
However, Intel revised that forecast lower on Nov. 12, saying gross margin would be about 55 percent "plus or minus a couple of points" and added "revenue is being affected by significantly weaker than expected demand in all geographies and market segments." The company noted then too "the PC supply chain is aggressively reducing component inventories."
It appears the situation worsened even more over the last six weeks of 2008. The company said in a statement today that it now sees gross profit margin at the lower end of its Nov. 12 forecast.
Intel is also taking a hit from declining valuation on Wall Street. The company said the value of its investment in Clearwire Corp. tumbled in 2008 and that it would take a non-cash charge of approximately $950 million on this transaction in the fourth quarter.
Clearwire's stock price has over the last 12 months dropped from a high of $7.20 to a 52-week low of $3.24, down 55 percent. The stocks were trading around $4.97 on Wednesday, Jan. 7.
"The company now expects the net gain or loss from equity investments and interest and other to be a loss of between $1.1 billion and $1.2 billion versus a previous expectation of a loss of approximately $50 million," Intel said.
Cost reduction efforts would help reduce spending, including R&D as well as marketing, general and administrative charges to $2.6 billion versus an earlier estimate for $2.8 billion, the company said.
Intel's share price fell about 5 percent on the news to approximately $14.62 in early trading Wednesday, Jan. 7.
By: DocMemory
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