Ashok Kumar and Drew Peck are both on Squawk box monday after 7am. What do you think they'll be discussing? Intel? Cisco? Lucent? microsoft? DEll? These analysts usually do their homework.
June 19, 1999
Intel Announces a Delay, and Its Shares
Tumble 5%
Pentium III Delivery Is Set Back 2 Months
By LAWRENCE M. FISHER
AN FRANCISCO -- Shares of the Intel Corporation dropped by
more than 5 percent Friday after the company informed personal
computer manufacturers that a faster version of its Pentium III processor
would be delayed by two months.
Intel shares closed at $54.9375, down
$3.0625, in Nasdaq trading. Two analysts
lowered their earnings estimates, but the
consensus remained unchanged for the current
quarter, at 54 cents a diluted share, according
to First Call.
The delay will affect a version of the Pentium III
that will achieve increased speeds by using tinier
circuits. This requires a new manufacturing
process that reduces the width of each wire
etched in silicon to 0.18 micron, from the
current 0.25 micron.
Analysts said it could slow revenue growth in the second half of the year.
"This is the first time I can remember that they had a problem ramping up
a process, and this is clearly being delayed because they can't carry it off
as rapidly as they thought," said Mark Edelstone, an analyst with Morgan
Stanley Dean Witter who cut his earnings estimate for the year and
lowered his recommendation on Intel stock from strong buy to
outperform. "I don't think they have a lot of downside risk, but this will
diminish what would have been growth catalysts for Intel over the next
few months."
Intel had said it would deliver three versions of the Pentium III on 0.18
technology, running at 600 megahertz, in the second half of the year.
"That is still true," said Tom Waldrup, an Intel spokesman.
A mobile version will not be delayed, but will ship initially at a
500-megahertz speed, and the server and work station versions will not
be affected, he said.
"The good news is that we've been able to deliver 600 megahertz this
summer with our 0.25 micron process, which we hadn't anticipated,"
Waldrup said.
Intel will report earnings on July 13.
Reducing the size of circuits offers several advantages including higher
speed, lower cost, less power consumption and less heat. Intel's ability to
move its chips to successively more advanced process technology has
been one key to its competitive advantage over rivals like Advanced
Micro Devices Inc., which has struggled with such transitions.
"The one thing we have all learned about yield problems at Intel is, unlike
at A.M.D., they don't last months, they last weeks if not days," said
Michael Murphy, editor of the California Technology Stock Letter.
He characterized the market reaction as "just silly," adding that he was
buying Intel shares Friday. |
