Hard drive shortage hampers Intel

Intel said hard disk drive shortages due to the flooding in Thailand would continue to hit its business in the first quarter after it reported lower fourth-quarter revenues than initially expected.

The world’s leading chipmaker by sales had warned in December that revenues would be reduced to about $13.7bn, rather than its previous forecast of $14.7bn, as the worldwide PC supply chain reduced inventories and microprocessor purchases in the wake of halted production of hard drives.

On Thursday, it reported fourth-quarter sales of $13.9bn, ahead of revised analyst estimates of $13.75bn, along with profits of 68 cents a share, beating Wall Street forecasts of 61 cents.

Stacy Smith, chief financial officer, said revenues for the current quarter were likely to be down 8 per cent from the fourth quarter, “slightly more than the average seasonal decline as we expect the shortage of hard disk drives to continue to impact our business”.

However, forecast revenues of $12.8bn matched those of analysts’ estimates. Intel shares rose nearly 1 per cent to $25.85 in extended trading in New York.

The company’s expectations for 2012 revenue growth are in the high single-digits in percentage terms, said Mr Smith. This compares with the forecast from Paul Otellini, chief executive, at its analyst day in May 2010 that Intel was on course for revenue and earnings per share growth in the low double-digits over the next few years. Revenues for 2011 were up 24 per cent over 2010 at $54bn.

On Thursday, Mr Otellini said in a statement that the Silicon Valley company had a “tremendous product and technology pipeline for 2012”.

“We’re excited about the global growth opportunities presented by Ultrabook systems, the data centre, security and the introduction of Intel-powered smartphones and tablets,” he said.

Intel had shown off its first smartphone, using its latest Atom chips, at the Consumer Electronics Show in Las Vegas last week, where thin and light Ultrabook laptops using Intel’s processors were also a main theme.

Mr Otellini said 2011 had been an exceptional year for Intel, with revenues growing by more than $10bn and annual revenue and profits records being eclipsed.