Intel cuts Q4 sales outlook by $1 billion due to HDD shortage

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Intel today annaounced that its fourth-quarter revenue will be lower than previously expected due to the ongoing hard disk drive supply shortages. The company said it now expects fourth-quarter revenue to be $13.7 billion, plus or minus $300 million, compared to  the previous expectation of $14.2 billion to $15.2 billion. Intel also lowered its gross margin outlook by half a point to 64.5%, plus or minus a couple of percentage points.

The company noted that sales of personal computers are expected to be up sequentially during the fourth quarter. However, the worldwide PC supply chain is reducing inventories and microprocessor purchases as a result of the supply shortages caused from the recent floodings in Thailand. Intel doesn't expect an impact in the current period, but it's bracing for the continued effect the restricted HDD production will have going into 2012.

"We do expect continued shortage of [hard-disk drives] to be pretty significant in the early part of 2012," Intel Chief Financial Officer Stacy Smith said. "And we expect supply to catch up to overall demand sometime in the first half of 2012. Where exactly that happens over the course of the first half is too early to say, but we do expect that this will catch up sometime in the first half."

The news sent Intel shares down 5% to $23.76 in recent trading. But Intel is not the only company feeling the effect of a slowdown in computer production. According to The Wall Street Journal, rival AMD also traded lower, off 4.9% to $5.27, while computer graphics chip maker Nvidia slid 4.1% to $14.29.

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