Intel Corp, the biggest computer-chip maker, is likely to reduce its third-quarter sales forecast because of falling prices, investors said.
The company will hold a conference call after US markets close to update analysts and investors on its business. In July, Intel said sales would be US$6.2 billion to US$6.8 billion. Analysts expect revenue of US$6.41 billion and profit of US$0.10 a share, the average estimates in a Thomson Financial/First Call survey.
"It will be at the low end of guidance or a small downward revision," said Louis Kokernak, senior equity strategist at Martin Capital Advisors, which owns 35,000 Intel shares. "It's a solid bet to assume it's going to be negative."
Intel dropped the price of its Pentium4 personal-computer processor by as much as 54 percent last month and has slashed the price by as much as 84 percent since the chip's November debut to jumpstart demand. Yesterday, an industry group said worldwide chip sales sank 37 percent in July, signaling that consumers and businesses are still putting off PC purchases even as prices fall.
Intel shares rose US$0.62 to US$27.47. The stock has lost 60 percent of its value in the past year, compared with a 25 percent decline in the Standard & Poor's 500 Index and a 52 percent drop in the Philadelphia Semiconductor Index.
In last year's third quarter, Intel had net income of US$0.36 a share on sales of US$8.73 billion.
The Semiconductor Industry Association said industrywide sales in July fell to US$10.9 billion from US$17.3 billion a year earlier. Sales for the month dropped 6.1 percent from June.
Intel investors would be disappointed with anything less than US$6 billion in third-quarter sales, said Paul Berlinguet, manager of the John Hancock Large Cap Growth Fund, which owns the stock.
Intel Executive Vice President Paul Otellini last week again said that the company expects sales during the next few months to be stronger than in the first half of this year.
"Anything has to be better than the first half," he said.
Even if Intel's sales reach the lower end of its targets, shareholders said the Santa Clara, California-based chipmaker may shave its estimates for gross margin, or the percentage of revenue left after subtracting manufacturing costs.
"The most significant thing in the near term for Intel is the recent lowering of prices and really starting a price war with AMD," said Mike Cohen, manager of the Alpha Analytics Digital Future Fund, which sold its Intel stake last month.
Rival Advanced Micro Devices Inc. last week said third- quarter sales will fall 15 percent from the previous period, the bottom end of the 10 percent to 15 percent range the company gave earlier. Advanced Micro expects a loss as it slashes prices to keep up with Intel, even as chip shipments rise from a year ago.
Intel has predicted gross margin of 47 percent for the quarter, plus or minus a couple points, and 49 percent for the year. Gross margin was 64 percent in the year-earlier quarter.
A margin at a percentage in the mid-40s would be disappointing, Hancock's Berlinguet said.
In the second quarter, PC shipments dropped from a year earlier for the first time since 1986, and analysts continue to push back expectations for a rebound in demand for communications gear. Some PC and chip companies said they expected back-to-school and holiday sales to cause a jump in demand in the second half.
Now, PC-industry executives have indicated that back-to-school sales so far have been subdued, as consumers spend less during an economic slowdown.
Dell Computer Corp last month predicted sales in the current period would be little changed to 5 percent lower than the previous quarter, missing analyst expectations at the time. Though Hewlett-Packard Co Chief Executive Carly Fiorina has said revenue will rise in the current quarter from the prior period, she said she didn't think the economy would pick up any time soon.
"I don't think there's going to be a bright spot in the traditional PC space," Kokernak said. "We will not see a recovery until early next year at best."
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft