Wall Street answered by sending its stock down by more than 9% to $23.19 in after-hours trading yesterday on the Nasdaq.
Intel saw record processor revenue during the fourth quarter, but suffered from a series of smaller events, said CFO Andy Bryant, on a conference call.
There’s no big wow-there’s-a-huge-change coming, he said. We don’t think end demand was a lot worse.
Rather, Intel bore slightly lower-than-expected average selling prices, higher headcounts in its two newest chip-making facilities and pressure from rival Advanced Micro Devices Inc.
We believe we lost a point of market share to AMD, Bryant said.
Intel revenue rose 6% to $10.2bn, but missed analysts’ expectations of $10.56bn and its own updated guidance by at least $200m. The company netted a $2.5bn profit, or 40 cents a share, up from $21bn, or 33 cents, a year ago.
The chipmaker, the world’s largest, plans to recapture lost market share with a slew of new dual-core products for this year, said chief executive Paul Otellini. Notably, Intel’s low-wattage Core Duo mobile processor, which has also found a home in Apple Computer Inc’s iMacs and other consumer living-room machines, he said.
We will be in a position to retake share over the course of 2006, Otellini said, on the call. I believe you’ll be able to plot the take back of market share along the dual core ramp of the company across multiple segments.
Besides its archrival, a pressing issue for Intel was a $250m to $300m inventory build during the quarter. Customers stockpile silicon components, or build inventory, in the supply chain in an attempt to counter shortages.
Intel has faced a chipset scarcity for some time now and last year relied on third-party chipset contract manufacturers, for the first time, to help it meet demand. But, the shortage persisted and continued to put a crimp on overall sales.
We anticipated third-party chipsets coming into the marketplace quicker than they did [during the quarter], Bryant said.
The inventory situation may turn around in a quarter, he said. We haven’t seen information out that says we will see this linger for the first half of the year.
While he said the company believes that supply matches demand today, there will still be a little bit of time that it will take to . . . return to what I call normal expectations, Bryant said. He also pointed out that was an improvement on its mid-quarter visibility.
A bright spot during the quarter was a 3% growth in mobile processors. I would not be talking about revenue shortfall if were dealing in the mobile business exclusively, Bryant said.
However, lower-end processor demand slowed in the key Asia Pacific market. Bryant said demand there did not move from desktop machines to other devices or that of competitors’ machines. There were just less computers being bought by people who wanted to use them, he said.
Looking ahead, Bryant said he expects underlying PC growth to be in the high single digits or low double digits.
For the current quarter, Intel guided to between $9.1bn and $9.7bn in revenue. Analysts had hoped, on average, for $10bn.
For the most recent quarter, Bryant would not specify by how much average selling prices of its processors had dropped, but concurred that an analysts’ 2% to 3% suggestion was in the ballpark.
Santa Clara, California-based Intel also announced it was canceling mid-quarter financial updates.
AMD, which is headquartered in nearby Sunnyvale, will report its fourth-quarter financials today.