DOW JONES NEWSWIRES
Intel Corp. (INTC) said it discovered a design issue in its
recently released Intel 6 Series support chip, and the company
amended its guidance to adjust for the effects of that issue and
the closing of two big acquisitions.
The chip-making giant said it expects the design issue to cut
its first-quarter revenue by about $300 million, though it isn't
expected to hurt full-year revenue. The company pegged the cost to
repair and replace the affected materials and systems in the market
at about $700 million.
Intel gave an updated revenue outlook that factors in the
chipset issue and the acquisitions of Infineon Technologies AG's
(IFX.XE) wireless business and McAfee Inc. (MFE), saying it now
expects first-quarter revenue to range from $11.3 billion to $12.1
billion, compared with its prior view of $11.1 billion to $11.9
billion. The Infineon deal closed Monday, and Intel said Monday it
expects the McAfee deal to close by the end of the first
quarter.
The company also said it expects first-quarter gross margin to
be 61%, plus or minus a couple of percentage points, compared with
its previous forecast of 64%, plus or minus a couple of percentage
points.
For the full year, Intel projects revenue growth in the mid- to
high teens, compared to its previous expectation of 10%.
The company said in some cases, the serial-ATA ports within
those chipsets may degrade over time, potentially affecting the
performance or functionality of other SATA-linked devices such as
hard drives and DVD drives. The chipset is used in the company's
latest second-generation Intel Core processors. Intel said it has
stopped shipments of the affected chip from its factories, has
corrected the design issue and has started making a new version of
the chip that will resolve the issue. Intel said it expects a "full
volume recovery" in April.
Intel has been busy on the acquisition front of late, announcing
in August that it would buy McAfee for $7.68 billion. It bought the
Infineon unit for $1.4 billion.
The company has posted record revenue and profits in recent
quarters, helped by a surge in demand for tech products following a
pullback in spending during the recession. Its exposure to the
enterprise market has buffered it of late from relatively weak
consumer demand for PCs.
Shares were halted before the company released the news. The
stock has risen 11% in the past year.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855;
nathan.becker@dowjones.com