Intel Q1 revenue to fall at low end of guidance

Intel narrowed its expectations for first-quarter revenue Thursday, staying within the guidance it provided in January but coming in at the low end of that range.

The Santa Clara, California, company expects to take in between US$8 billion and US$8.2 billion for its first quarter, it said in a release. When reporting fourth-quarter results in January, Intel said first-quarter revenue would fall between US$7.9 billion and US$8.5 billion.

Demand for PC and server processors was at the low end of normal seasonal patterns, Intel said. The first half of the calendar year is generally slower for semiconductor companies than the second half, in which the two most important buying periods of the year occur.

Intel's business in Asia-Pacific and Japan was a little weaker than had been expected, accounting for the new guidance, said Andy Bryant, Intel's chief financial officer, in a conference call to discuss the announcement.

Intel's business units in those regions expected the first quarter to defy seasonal patterns and come in about level with the fourth quarter, Bryant said. As a result, they built up larger stores of inventory than they typically would for that time of year and needed to clear out some of the excess, he said.

The first quarter has otherwise fallen in line with Intel's expectations, Bryant said. Corporate spending met the chip maker's forecasts, as companies continued to gradually replace aging IT equipment, he said.

First-quarter 2004 demand for Intel Architecture products has been "significantly higher" than reported in the first quarter of 2003, Intel said. During that quarter, Intel reported revenue of US$6.75 billion. The midpoint of the range for this year's first quarter, US$8.1 billion, represents a 20 percent increase year-over-year, Bryant said.

Demand for communications products such as flash memory and the XScale handheld processors is consistent with the level of demand Intel expected in January, it said.

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