Intel drops revenue estimates by $1B

March 13, 2015 // 11:33 a.m.

Tags: #data-centre #desktop #financial #gross-margin #idc #intel #laptop #market #processor #revenue #semiconductor #slump #traditional-pc

Intel has warned investors that its revenue for the quarter is to be around a billion dollars lower than previously expected, blaming lower than expected demand for traditional desktop machines for the shortfall.

In an announcement made late yesterday, Intel warned that revenue for its first quarter - due to be reported in mid-April - will be nearly a billion dollars lower than expected, at $12.8 billion plus or minus $300 million from $13.7 billion plus or minus $300 million. While that still gives the chip giant healthy revenue for the quarter, it's a blow for industry claims that the long-running slump in sales of traditional desktop and laptop machines was on the turn.

Intel has blamed 'weaker than expected demand for business desktop PCs' for the shortfall, along with the supply chain holder lower than expected inventory levels - in other words, ordering fewer chips. This, Intel's financial minds believe, is down to an overestimation of how much of an impact the end of Windows XP's life would have: an expected upswing in purchasing, as businesses migrate from the out-of-support operating system to new machines running Windows 8.1, did not materialise as expected.

The International Data Corporation (IDC) has warned that worse is to come for companies like Intel, too: its latest report claims that traditional PC shipments will drop 4.9 per cent this year - higher than its previous estimate of 3.3 per cent. Although that still represents shipments of some 293.1 million machines, it's a blow for an increasingly embattled industry - although one IDC claims may reverse with the launch of Intel's Skylake platform and Microsoft's Windows 10 later this year.

Intel has indicated that the revenue shortfall won't affect its expected gross margin of 60 per cent plus or minus two per cent, thanks to increased spending in the data centre market and higher average selling prices across the majority of its products. Firm figures are to be released by the company in an earnings report scheduled for the 14th of April.
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