March 3, 2006 11:33 AM PST

Intel issues revenue warning

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.

See more CNET content tagged:
earnings warning, chip company, Intel

5 comments

Join the conversation!
Add your comment
AMD
AMD is killing them, the Apple switch isn't doing anything yet for Intel

<a class="jive-link-external" href="http://otherthingsnow.blogspot.com/" target="_newWindow">http://otherthingsnow.blogspot.com/</a>
Posted by SqlserverCode (165 comments )
Reply Link Flag
Re: AMD
I love it!!! The little company that could! AMD, smaller, better and their stock is double that of Intel right now. Hopefully we will see in the future about a 50/50 split in market share between the two.
Posted by SeizeCTRL (1333 comments )
Link Flag
I wish AMD would kill me like that.
Intel is limping along with over $9 billion in revenue, and over $2 billion in profit, per quarter.
Posted by just_some_guy (231 comments )
Link Flag
If it's the 3rd time, why is Wall Street surprised?
If it's the 3rd time, why is Wall Street surprised? Usually a company revises its quarterly estimates downward enough so they can beat the revised estimates.
Posted by lingsun (482 comments )
Reply Link Flag
 

Join the conversation

Add your comment

The posting of advertisements, profanity, or personal attacks is prohibited. Click here to review our Terms of Use.

What's Hot

Discussions

Shared

RSS Feeds

Add headlines from CNET News to your homepage or feedreader.