barret is very happy with demand though
Intel CEO Says Computer Industry Has `Bottomed Out' (Update2)
2001-08-02 06:37 (New York)
Intel CEO Says Computer Industry Has `Bottomed Out' (Update2)
(Industry context, investor comment from third paragraph.)
Penang, Malaysia, Aug. 2 (Bloomberg) -- Intel Corp., the
world's biggest chipmaker, expects demand from the computer
industry to rebound in the third and fourth quarters, driven by
``back-to-school'' and holiday season sales.
``The industry has bottomed out,'' Chief Executive Craig
Barrett said at a press conference on investments in Malaysia.
Intel and rivals such as STMicroelectronics NV have been
predicting orders may pick up by the end of the year. The
semiconductor industry has faced slumping earnings as slowing
growth led consumers and businesses to cut spending.
European semiconductor stocks such as ST, Europe's biggest
chipmaker, and Infineon Technologies AG, rose, extending gains
made yesterday after Merrill Lynch & Co. raised its outlook on
the semiconductor industry, saying the worst is over.
Barrett's comments ``confirm what everyone seems to be
thinking now: things have stopped getting worse,'' said Valerie
Cazaban-Levy, who helps manage $160 million, including ST and
Intel shares, at Stratege Finance in Paris. ``Inventories have
been cleared massively. This means the industry could rebound
soon.''
Seasonal Recovery?
The extent of any recovery will depend on a recovery in
major world economies, Barrett said.
``Until the U.S. and Japan economies get back on track, I
am afraid it will be more likely due to seasonal rather than
fundamental'' factors, he said.
The U.S. economy grew in the second quarter at its slowest
pace in eight years as business investment slumped, a
government report showed last week. Gross domestic product, the
total of all goods and services produced in the U.S., increased
at a 0.7 percent annual pace in the April-June period, the
Commerce Department said.
``If you look at the history of recession in the last 25
years, typically they don't last more than a year,'' he said.
We will have to assume it will follow the law and as soon as it
ends, there will be an increase in investments, Barrett said.
He also said Intel won't change its forecast that third-
quarter sales will fall to $6.2 billion to $6.8 billion, saying
he is ``conservative'' with the target.
Intel Chief Financial Officer Andy Bryant forecast on July
17 that PC sales will pick up in the second half. His
prediction came as Intel reported second-quarter profit fell
and sales dropped 24 percent as the company cut personal-
computer processor prices and demand slumped.
Shares of Intel traded in Germany rose as much as 68
cents, or 1.9 percent, to 35.68 euros ($31.47). In U.S. trading
yesterday, the stock rose 3.2 percent to $30.75.
Malaysia
ST shares rose as much as 2.7 percent, extending
yesterday's 6 percent gain. Infineon Technologies AG, Germany's
largest chipmaker, rose as much as 2.8 percent after gaining
2.5 percent yesterday.
The Dow Jones Europe Stoxx 50 Index gained 37.35 points,
or 1 percent, to 3972.02, rising for the sixth day. That left
the index 7.2 percent above the 21-month low to which it fell
on July 25.
Intel said it will make additional investments in Malaysia
to assemble its Pentium 4 processor, making it the first
country in Asia to produce the company's latest computer chip.
Intel will also develop a microprocessor design center in
Malaysia, also the first such facility in Asia, for the group.
Intel has invested $1.9 billion since 1972 in northern
Penang state with 8,500 workers, turning it into the Santa
Clara, California-based chipmaker's biggest assembly, test and
manufacturing facility.
--David Yong in Kuala Lumpur (603) 2160-6802 or at
dyong@bloomberg.net, with reporting by Jad Mouawad in
Paris/mh/msh/msp
Story illustration: For a graph of Malaysian Pacific Industries
Bhd. compared with the benchmark Composite Index, click on
{MPI MK <Equity> COMP <GO>} |
