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

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.

Red Hat nears $1 billion in revenue

In March 2008, Red Hat CEO Jim Whitehurst predicted that his company would be the first pure play open source software vendor to reach $1 billion in revenue. That forecast has nearly come to fruition. According to the organization's latestearnings report, Red Hat raked in $909.3 million during fiscal 2011, an increase of 22% on-year. Fourth quarter revenue totaled $244.8 million, up 25% from the year-ago period, while quarterly and yearly subscription revenue rose 21% and 24%.

"With record bookings and billings in the fourth quarter, we are on a run rate to become the first pure-play open source company to achieve a billion dollars in revenues next fiscal year, a milestone achievement for Red Hat and the open source community," said Whitehurst. He attributes the growth to strong demand by enterprise customers who are preparing their infrastructure for cloud computing, as Red Hat is increasingly focused on providing cloud-based products and services.

"This year we focused on growth with aggressive hiring for sales and engineering, launched major product releases and invested in technologies focused on cloud computing. These investments produced greater than 20% growth in revenues and non-GAAP operating income for both the quarter and the year. At the same time, we increased non-GAAP operating margins by 110 basis points and improved cash flow. It was a good year," said Executive Vice President and CFO Charlie Peters.