Intel says sales hit by hard drive shortage
By Noel Randewich
(Reuters) - Intel Corp warned that hard-disk drive supply shortages would hurt its current-quarter revenue, the latest heavyweight in the PC industry to caution about the effects of flooding that has crippled factories in Thailand.
The warning sent shares of the world's top chipmaker down 4.8 percent and weighed on Wall Street.
Hundreds of people have died in flooding in Thailand that has caused billions of dollars in damages since late July and disrupted international supply chains in the PC and automobile industries.
PC makers have been scrambling to buy increasingly scarce hard drives after the flooding shut down factories in the country, which is the world's No 2 exporter of the components.
"In the last two weeks, as the supply became more apparent, we saw a substantial change in our order rate. Most of our customers are concerned the shortage will continue -- especially through the early part of the first quarter," Intel Senior Vice President Tom Kilroy told analysts on a conference call.
Major PC makers including Hewlett Packard, Dell, Lenovo and Acer since October have warned to varying degrees that they may build fewer PCs as they use up the current stock of hard drives and struggle to replace them.
Intel said its customers are reducing their stock of chips in anticipation of the hard drive shortage continuing early next year, although it said it still expects sales of PCs to be up in the fourth quarter.
"This is Intel coming to terms with it," said Stifel Nicolaus analyst Kevin Cassidy. "I think Intel sees a lag effect as inventory gets worked down. Then they'll see an accelerated effect as inventories rebuild." Continued...