| Intel (INTC) 27.20: The holders of this semiconductor giant just won't take the hint. Yet another analyst is ringing the alarm on Intel this morning. Briefing.com is hearing from sources at CSFB that the firm is saying that Intel's quarter is running 30% behind plan and recommends selling the stock. Others have made cautious comments on INTC, but a 30% miss is substantial....Times are tough for Intel as the pricing environment is becoming increasingly intense. Not only has Intel aggressively cut prices on its P4, AMD also slashed its prices two weeks ago. Street prices on P4s continued to show even more dramatic declines. In fact, some of the P4s are trading below PIII list and street prices. Also, the PC market is slowing dramatically. Yesterday, Merrill Lynch reduced its worldwide 2001 PC unit growth forecast to 3% from 7%, however, next year could be surprisingly strong as the firm raised its growth forecast to 17.5% from 15.5%. This morning, CSFB lowered its PC growth rate for this year to 0% from 5%....So, it's not surprising that analysts expect Pentium 4 unit shipments will be well under plan in Q2. There is speculation that chip shipments could come to only around half of the 3 mln units the company had hoped for and the full year could net only 10 mln P4 units, half the 20 mln it had originally planned. In addition, the chip's high cost and price pressure should hurt gross margins. The problem is that the new Pentium is about twice as big as the Pentium 3 chip, so it ends up costing Intel much more to produce. On the cost side, the problem will not be alleviated until Intel switches over production to a 0.13-micron process, but by then AMD will likely be using the same technology. Also, AMD is rapidly gaining share in desktops and plans to aggressively target the notebook and server/workstation markets in the second half of the year....One thing for certain is that if Intel does not warn over the next couple of weeks, speculation will increase that Intel will warn when it gives its mid-quarter update June 7. Bottom line:, long term holders should wait out this cycle, but we see little in terms of a catalyst to be buyers right now especially considering that there has been a 33% rise in the Semi Index since early April. -- Robert J. Reid, Briefing.com |
