Intel Takes Body Blow
By Alexei Oreskovic
TheStreet.com Staff Reporter
1/17/2006 4:51 PM EST
thestreet.com
Updated from 4:43 p.m. EST
Lower-than-expected desktop chip shipments ate into Intel's (INTC:Nasdaq - commentary - research - Cramer's Take) fourth-quarter sales, as the world's largest chipmaker reported bleak financial results Tuesday.
In addition, the company's forecast for the first quarter and current fiscal year now under way were equally disappointing.
The news sent shares of Intel plunging more than 7% to $23.70 in extended trading on Instinet.
Intel posted fourth-quarter revenue of $10.2 billion, missing its own guidance of a $10.4 billion and $10.6 billion revenue range. The company earned 40 cents a share.
Analysts polled by Thomson First Call had been expecting $10.5 billion in revenue, with EPS of 43 cents.
In a statement accompanying the results, Intel CEO Paul Otellini said that despite failing to meet its targets for the fourth quarter, the company was entering 2006 with a slew of new products.
"We expect 2006 will be another year of growth for Intel as we ramp platforms for notebooks, the digital home, the digital office and emerging markets," said Otellini.
Gross margin for the fourth quarter was 61.8%, slightly below the company's guidance of 63%, plus or minus one point.
The company recorded $38.8 billion in annual revenue for 2005, up 13.5% from 2004.
The company attributed flat sequential sales in the Asia Pacific region, and a 3.5% sequential decline in sales in the Americas region, to lower-than-expected demand for desktop processors among certain OEM customers.
Sales in Intel's desktop microprocessor group, which accounts for the company's largest source of revenue, were down 6.2% from the year-ago period. Notebook processor sales during the quarter, on the other hand, jumped 40% from a year ago.
The company projected that revenue for 2006 will be up 6%-9% in 2006, with a gross margin of 57%.
The midpoint of that suggested 2006 revenue range of $41.1 billion to $42.3 billion comes in below the current Thomson First Call survey of $42.3 billion.
I just call it as I see it Rich. Still worried here! |
