SANTA CLARA, Calif. — (BUSINESS WIRE) — August 28, 2009
As a result of stronger than expected demand for microprocessors and
chipsets, Intel Corporation now expects revenue for the third quarter to
be $9.0 billion, plus or minus $200 million, as compared to the previous
range of $8.5 billion, plus or minus $400 million.
The gross margin percentage for the third quarter is expected to be in
the upper half of the previous range of 53 percent, plus or minus two
percentage points. All other expectations are unchanged.
Intel’s third-quarter Business Outlook was originally published in the
company’s second-quarter 2009 earnings release, available at intc.com.
The company is scheduled to report its third-quarter financial results
on Oct. 13.
Status of Business Outlook
Through Aug. 31, Intel’s corporate representatives may reiterate the
Business Outlook during private meetings with investors, investment
analysts, the media and others. From the close of business on Aug. 31
until publication of the company’s third-quarter earnings release, Intel
will observe a “Quiet Period” during which the Business Outlook
disclosed in the company’s press releases and filings with the SEC
should be considered to be historical, speaking as of prior to the Quiet
Period only and not subject to an update by the company.
The above statements and any others in this document that refer to plans
and expectations for the third quarter, the year and the future are
forward-looking statements that involve a number of risks and
uncertainties. Many factors could affect Intel’s actual results, and
variances from Intel’s current expectations regarding such factors could
cause actual results to differ materially from those expressed in these
forward-looking statements. Intel presently considers the following to
be the important factors that could cause actual results to differ
materially from the corporation’s expectations.
Ongoing uncertainty in global economic conditions poses a risk to the
overall economy as consumers and businesses may defer purchases in
response to tighter credit and negative financial news, which could
negatively affect product demand and other related matters.
Consequently, demand could be different from Intel's expectations due
to factors including changes in business and economic conditions,
including conditions in the credit market that could affect consumer
confidence; customer acceptance of Intel’s and competitors’ products;
changes in customer order patterns including order cancellations; and
changes in the level of inventory at customers.
Intel operates in intensely competitive industries that are
characterized by a high percentage of costs that are fixed or
difficult to reduce in the short term and product demand that is
highly variable and difficult to forecast. Additionally, Intel is in
the process of transitioning to its next generation of products on
32nm process technology, and there could be execution issues
associated with these changes, including product defects and errata
along with lower than anticipated manufacturing yields. Revenue
and the gross margin percentage are affected by the timing of new
Intel product introductions and the demand for and market acceptance
of Intel's products; actions taken by Intel's competitors, including
product offerings and introductions, marketing programs and pricing
pressures and Intel’s response to such actions; and Intel’s ability to
respond quickly to technological developments and to incorporate new
features into its products.
The gross margin percentage could vary significantly from expectations
based on changes in revenue levels; capacity utilization; start-up
costs, including costs associated with the new 32nm process
technology; variations in inventory valuation, including variations
related to the timing of qualifying products for sale; excess or
obsolete inventory; product mix and pricing; manufacturing yields;
changes in unit costs; impairments of long-lived assets, including
manufacturing, assembly/test and intangible assets; and the timing and
execution of the manufacturing ramp and associated costs.
Expenses, particularly certain marketing and compensation expenses, as
well as restructuring and asset impairment charges, vary depending on
the level of demand for Intel's products and the level of revenue and
The tax rate expectation is based on current tax law and current
expected income. The tax rate may be affected by the jurisdictions in
which profits are determined to be earned and taxed; changes in the
estimates of credits, benefits and deductions; the resolution of
issues arising from tax audits with various tax authorities, including
payment of interest and penalties; and the ability to realize deferred
The current financial stress affecting the banking system and
financial markets and the going concern threats to investment banks
and other financial institutions have resulted in a tightening in the
credit markets, a reduced level of liquidity in many financial
markets, and heightened volatility in fixed income, credit and equity
markets. There could be a number of follow-on effects from the credit
crisis on Intel’s business, including insolvency of key suppliers
resulting in product delays; inability of customers to obtain credit
to finance purchases of our products and/or customer insolvencies;
counterparty failures negatively impacting our treasury operations;
increased expense or inability to obtain short-term financing of
Intel’s operations from the issuance of commercial paper; and
increased impairments from the inability of investee companies to
obtain financing. Gains or losses from equity securities and interest
and other could also vary from expectations depending on gains or
losses realized on the sale or exchange of securities; gains or losses
from equity method investments; impairment charges related to debt
securities as well as equity and other investments; interest rates;
cash balances; and changes in fair value of derivative instruments.
The current volatility in the financial markets and overall economic
uncertainty increases the risk that the actual amounts realized in the
future on our debt and equity investments will differ significantly
from the fair values currently assigned to them.
The majority of our non-marketable equity investment portfolio balance
is concentrated in companies in the flash memory market segment, and
declines in this market segment or changes in management’s plans with
respect to our investments in this market segment could result in
significant impairment charges, impacting restructuring charges as
well as gains/losses on equity investments and interest and other.
Intel's results could be impacted by adverse economic, social,
political and physical/infrastructure conditions in countries where
Intel, its customers or its suppliers operate, including military
conflict and other security risks, natural disasters, infrastructure
disruptions, health concerns and fluctuations in currency exchange
Intel's results could be affected by adverse effects associated with
product defects and errata (deviations from published specifications),
and by litigation or regulatory matters involving intellectual
property, stockholder, consumer, antitrust and other issues, such as
the litigation and regulatory matters described in Intel's SEC reports.