Intel shares fall on outlook, AMD rises
Reuters
Friday, December 9, 2005; 11:25 AM
NEW YORK (Reuters) - Shares of Intel Corp. <INTC.O> traded lower after the world's biggest chipmaker issued a quarterly sales outlook that disappointed investors.
Shares in its main rival, Advanced Micro Devices Inc. <AMD.N>, rose 2 percent.
"The PC market is strong and Intel is putting up weak numbers," said Kevin Rottinghaus, an analyst with FTN Midwest.
Intel shares fell 19 cents, or 0.7 percent, to $25.51. Some 25 million shares changed hands in the first hour of Nasdaq trading -- about half the three-month daily average.
Shares of AMD rose 90 cents, or 3.5 percent, to $26.55.
AMD appears to be taking market share from Intel, which said it is facing supply issues that have hampered sales.
"I do think AMD is picking up share versus Intel," said Soleil Securities analyst Paul Leming. "Intel recognizes that's going on, they don't deny it."
The concerns about Intel's outlook arose late Thursday after the chipmaker issued a regularly scheduled mid-quarter earnings outlook.
The Santa Clara, California company said it expects quarterly revenue of $10.4 billion to $10.6 billion. That's in the middle of its previous range of $10.2 billion to $10.8 billion.
The midpoint of the revised range is only slightly below the Wall Street average forecast of $10.6 billion.
But analysts said that investors had been hoping that Intel would move its forecast toward the top end of its previous outlook after other chipmakers such as Texas Instruments Inc. and Xilinx Inc. strengthened forecasts on Wednesday, according to analysts.
FTN Midwest market research has turned up evidence that AMD continues to take market share from Intel, based on conversations with electronics suppliers in Asia.
"The implication is that AMD's market share gain is accelerating," Rottinghaus said.
Intel's sales outlook, and a weak forecast for capital expenditures, pressured some other big technology names. Semiconductor equipment maker Applied Materials Inc. <AMAT.O> was off 10 cents at $18.63.
Cody Acree, an analyst with Stiifel Nicolaus, said that Intel's problem stems from its inability to produce enough computer chips to meet demand.
"They are capacity constrained so that there's not much ability to ship more than they've already shipped," Acree said.
Additionally, Acree said, Intel had a strong third quarter, which "likely pulled in some business from Q4."
Shares in Dell Inc. <DELL.O>, the world's No. 1 personal computer maker, rose 7 cents to $31.72. Shares of Apple Computer Inc. <AAPL.O>, which currently does not use Intel chips in its Mac computers, were off 21 cents to $73.87.
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