Intel may not meet its earnings forecast of $6.2-6.8 billion. So reckons US merchant bank Thomas Weisel Partners analyst Eric Ross.

At the heart of the problem lies the Pentium 4. Ross believes that Intel will ship far fewer P4s than the chip maker hopes it will. Intel's financial expectations are based on it being able to ship 20 million P4s during the current calendar year - Ross estimates that it will manage only half that number.

Making matters worse for the chip giant are the high cost of P4 production and - thanks to April's massive price cuts - its relatively low margins. Ross doesn't believe Intel will make the 49 per cent gross margin it's predicting for Q2. The price cuts may not help Intel too much because of troubles mobo makers may be having with the chip.

"Our sources indicate that motherboard designers are having problems integrating P4 into existing boards. Finding compatible power supplies is particularly difficult, while RDRAM-only Intel-based solutions are often prohibitively expensive," writes Ross.

The strides AMD is making with Athlon aren't helping either. "In the meantime, we believe that AMD continues to gain share in the desktop. We believe this trend will continue with new mobile and server/workstation Athlons (Palomino) scheduled for shipment in June."

The upshot: Intel must "lower its guidance for 2QFY01 or miss estimates".

Whichever option Intel choses, Ross estimates revenues of $6.1 billion for Q2 2001 and earnings of eight cents a share - half the earnings Intel reported for Q1. For the full year, Ross expects revenues of $26.68 billion and earnings of 45 cents a share. ®