"The chipmaker insists it has all but solved the supply problems that spawned a sales shortfall. Analysts are unconvinced"
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Chipmaker Intel had a great year, but a "difficult" December. That's how Chief Financial Officer Andy Bryant characterized fourth-quarter revenue, which fell short of Intel's earlier forecast by $200 million.
Bryant blamed the miss on an ongoing shortage of chipsets -- ...-- coupled with weakness in PC sales, particularly in the Americas. The chipset-supply issue, which Intel first described in its midquarter update in December, reportedly has led to lost microprocessor business among some PC makers.
"MISMANAGEMENT OF FORECASTS." Intel Chief Executive Paul Otellini had hoped to fill the gap with third-party chipsets from vendors like ATI (ATYT ), Via Technologies, and SIS. But when those chipsets didn't materialize, PC makers were left holding the bag -- with an expensive stockpile of PC microprocessor chips they couldn't use.
"STAY ON THE SIDELINES." Bryant portrayed the chipset problem as nearly solved. "We believe that we have enough now to meet everybody's needs in the first quarter," he said. "We still believe it will take a while to get all the supply lines working."
San Francisco-based Needham & Co. analyst Charlie Glavin, who first identified the chipset issue in September, says even he was surprised. "I was floored by how bad it was," Glavin says. "I don't think it's realistic to expect that this is going to work itself out by the second quarter.
MISSED TARGETS. The news caught other analysts by surprise as well. . . . The chipmaker's dour revelations stood in contrast to the hoopla of a week earlier, when Apple (AAPL ) wowed investors with new computers sporting Intel chips (see BW Online, 1/10/06, "Apple's iPod, Intel Revelations").
. . . If only Intel could get the chips to its demanding PC-making customers on schedule.
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Hesseldahl is a writer for BusinessWeek Online in New York |
