Intel Warns Sales to Fall Below Expectations
By JACK LYNCH
March 8, 2001
Providing perhaps the strongest evidence yet of the deepening difficulties at technology companies, the Intel Corporation warned late today that its revenues would fall about 25 percent in the current quarter from its previous quarter.
The company had previously anticipated a 15 percent decline.
Intel, the world's largest computer chip maker, said the nation's economic slowdown was continuing to weigh on demand for personal computers and was spreading to the networking, communications and server industries.
The Santa Clara, Calif.-based company also said it would eliminate 5,000 jobs, mainly through attrition, over the next nine months.
Intel's warning comes just a day after Yahoo Inc., the Internet media company, disclosed that its financial results in the current quarter would be substantially worse than Wall Street's forecasts and said its chief executive was stepping down.
And on Monday, three other chip makers — Cypress Semiconductor, Vitesse Semiconductor and LSI Logic — lowered their forecasts for the current quarter, saying there were backlogs in the supply chains of companies that buy their chips. Other chip companies have made similar warnings in recent weeks, and a trade group reported this week that worldwide sales of semiconductors fell 5.7 percent from December to January.
Intel issued its warning after the stock market closed. In after-hours trading, the company's shares fell more than $2, to $30.94, shortly after the announcement. Earlier, Intel ended regular trading up 31 cents, at $33.25. The stock is now down about 60 percent from its 52-week high.
Intel reported revenue of $8.7 billion in the fourth quarter of last year, and a 25 decline would indicate that this quarter's revenue would drop to about $6.5 billion. Industry analysts had been expecting first-quarter revenue of about $7.4 billion, based on Intel's previous projection, according to First Call/Thomson Financial.
For now, the company is still expected to report operating earnings of 21 cents a share for the first quarter, according to First Call.
Intel also said it was cutting its forecast for its gross margin to 51 percent, plus or minus a couple of points, from its previous projection of 58 percent. |
