Intel issues revenue warning

First-quarter revenue to fall below expectations, marking company's third surprising results in a row.

By Dawn Kawamoto
Staff Writer, CNET News.com

Published: March 3, 2006, 11:33 AM PST

Last modified: March 3, 2006, 11:31 AM PST

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A correction was made to this story. Read below for details.

Intel warned on Friday that its first-quarter revenue will fall below expectations, marking the third consecutive quarter in which the chip giant has surprised Wall Street.

The company cited weaker-than-expected demand for its chips and a slight decline in market share as the reason for the warning. Last year, the chip giant issued an earnings warning for the fourth quarter and narrowed its forecast for the third quarter as well.

Intel said it now expects its first-quarter revenue to be in the range of $8.7 billion to $9.1 billion, compared with its previous forecast of $9.1 billion to $9.7 billion.

The company also said it expects its research and development costs and its administrative expenses to be lower than previously expected in the first quarter, due to its lower-than-anticipated revenue.

Intel plans to issue an updated outlook for its business when it reports its first-quarter results on April 19.

Despite the sharply lower revenue forecast for the first quarter, Intel's shares did not take a beating when the markets opened during their regular session.

The Santa Clara, Calif.-based company, which issued its first-quarter warning before the markets opened, was down a slight 27 cents, or just more than 1 percent, to $20.22 a share in early trading.

Analysts, such as Christopher Danely of J.P. Morgan Securities, estimated Intel lost roughly two to three points of market share in the first quarter, as the chip giant encountered excess inventory among its customers and a slight weakness in demand in the quarter.

"Although the company lowered guidance, we expect further downside to (analysts) concensus estimates due to lower gross margins," Danely said in his research report.

Correction: This article incorrectly stated how many quarters in which Intel has issued an earnings warning. This is the third consecutive quarter.

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If it's the 3rd time, why is Wall Street surprised?

lingsun
Mar 3, 2006, 10:31 AM PST

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SqlserverCode
Mar 3, 2006, 8:02 AM PST

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