Intel Swings, Misses

I've been fairly critical of Intel (Nasdaq: INTC  ) in these digital pages in recent times. But it's not like the chip maker hasn't given me ammunition. There have been delays, manufacturing flaws, unmet earnings expectations, reduced sales guidance, and stinging jabs from rival Advanced Micro Devices (NYSE: AMD  ) , whose Opteron combination chip turned the longtime market leader into a follower.

Late yesterday, Intel reported more bad news. The chip maker now says that it expects to book between $8.3 and $8.6 billion in sales for the quarter, down from earlier guidance of $8.6 to $9.2 billion. That's a Jose Canseco-sized swing and miss. Heck, I can feel the breeze from here.

Intel blamed the third-quarter shortfall on weak consumer demand for computer processors and flash memory chips. Talk about timing. Only yesterday Fool colleague Bill Mann reported that the upcoming quarter is likely to be weak because consumers are running low on moolah. Intel and others such as Motley Fool Stock Advisor pick Dell (Nasdaq: DELL  ) , Apple (Nasdaq: AAPL  ) , and Hewlett-Packard (NYSE: HPQ  ) have to hope this is an anomaly and not a trend.

Oh yeah, and then there's stock options. The Financial Standards Accounting Board (FASB) has finally decided in favor of expensing stock options. That, too, will hurt Intel. Fool Seth Jayson reported last month that nearly 20% of the chip maker's second-quarter net income would have evaporated had options been expensed.

To be fair, Intel isn't the only chip maker hurting. The Semiconductor Industry Association reported yesterday that global chip sales for July were up slightly less than expected.

But all investors see is red, and they've punished Intel's shares by more than 7% as of this writing. Though I have chided investors before for overreacting to short-term shortcomings, I sympathize with this morning's sellers. For a company that's so used to routinely hitting the ball out of the park, Intel has swung through way too many pitches.

This time, it could be strike three.

For more Foolish coverage of Intel:

What do you think? Will Intel get innovative and find a way out of the mess it's in? Can AMD continue to take advantage? Or does the big sell-off in Intel create a buying opportunity? Debate all this and more at the Intel discussion board. Only at Fool.com

All this talk of chips has Motley Fool contributor Tim Beyers hungry for Mexican food. Can you please pass the salsa? Tim has no ownership interest in any of the companies mentioned, and you can view his Fool profile here.


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