Replies to post #98395 on Intel Corp (INTC)

[mas]

http://blogs.barrons.com/techtraderdaily/2011/01/31/intel-shares-halted-for-news/

Intel has announced a design flaw was found in a chip accompanying its recently released “Sandy Bridge” line of PC processors. A fix is expected to be issued in February, and the result will be a $300 million reduction to Q1 revenue, it said, and will reduce Q1’s expected gross margin percentage by 1 point, to 61%. Full-year gross margin is expected to be 63%, versus 64%, previously.

As Intel described the matter:

As part of ongoing quality assurance, Intel Corporation has discovered a design issue in a recently released support chip, the Intel® 6 Series, code-named Cougar Point, and has implemented a silicon fix. In some cases, the Serial-ATA (SATA) ports within the chipsets may degrade over time, potentially impacting the performance or functionality of SATA-linked devices such as hard disk drives and DVD-drives. The chipset is utilized in PCs with Intel’s latest Second Generation Intel Core processors, code-named Sandy Bridge. Intel has stopped shipment of the affected support chip from its factories. Intel has corrected the design issue, and has begun manufacturing a new version of the support chip which will resolve the issue. The Sandy Bridge microprocessor is unaffected and no other products are affected by this issue.

However, if you look at the numbers, it would appear the Q1 forecast has actually improved: the company now sees Q4 revenue of $11.7 billion, plus or minus $400 million, versus a prior view of $11.5 billion, plus or minus. Moreover, the full-year growth view is now “in the mid- to high-teens,” Intel said, on a percentage basis compared to the company’s prior expectation of approximately 10%.

[imho]

herb will,

Updated 2011 First Quarter and Full Year Outlook
Separately, Intel (INTC:$21.455,0$-0.005,0-0.02%) recently announced that it had completed the acquisition of the Infineon Technologies AG Wireless Solutions business, which will now operate as the Intel Mobile Communications group. The company also expects to complete the acquisition of McAfee (MFE:$47.90,00$0.0300,0.06%) by the end of the first quarter.
The effects of the chipset issue and these transactions are incorporated into the company's revised outlook. The company now expects first-quarter revenue to be $11.7 billion, plus or minus $400 million, compared to the previous expectation of $11.5 billion, plus or minus $400 million. Gross margin percentage is now expected to be 61 percent, plus or minus a couple percentage points, compared to the previous expectation of 64 percent, plus or minus a couple percentage points. Spending (R&D plus MG&A) is now expected to be approximately $3.6 billion, compared to the previous expectation of approximately $3.4 billion.
The full-year revenue growth percentage is now expected to be in the mid-to high teens, compared to the company's prior expectation of approximately 10 percent. Full-year gross margin is now expected to be 63 percent, plus or minus a few percentage points, compared to the previous expectation of 65 percent, plus or minus a few percentage points. Spending (R&D plus MG&A) is now expected to be $15.7 billion, plus or minus $200 million, compared to the company's previous expectation of $13.9 billion, plus or minus $200 million. Research and development (R&D) spending is now expected to be approximately $8.2 billion, compared to the previous forecast of $7.3 billion.
All other expectations for the first-quarter and full-year remain unchanged. With the exception of McAfee (MFE:$47.90,00$0.0300,0.06%) , the outlook for the first quarter and full year do not include the effect of any acquisitions, divestitures or similar transactions that may be completed after Jan. 31. The acquisition of McAfee (MFE:$47.90,00$0.0300,0.06%) is subject to customary closing conditions.

Indeed, there was a slew of DJ headlines coming across a few moments ago. Apparently they will take a charge for the failure but increase the expected revenues for the next quarter. Some good news actually, considering the initial headline of a chip flaw.


IMHO