Hi Patsy,
Re: Heard Intel got a downgrade by Kumar this morning. Hope it doesn't spill over ...
The sluggish demand will also hurt sales at PC makers this quarter, Kumar wrote.
Intel couldn't immediately be reached to comment. In July, the company said sales in the current period would rise from the second quarter's, Intel's most positive outlook for the third quarter in more than five years.
Gross Margins
After recalling its 1.13-gigahertz Pentium III processor last week, Santa Clara, California-based Intel needs to quickly move the Pentium 4 into volume production so it can compete in the hottest segment of the market in the first half of next year, Kumar said. He expects that push to hurt Intel's gross margins, the percentage of sales left after subtracting manufacturing costs.
Kumar predicts the stock will fall back into the $60 range.
Investors have reason to take note of Kumar's predictions. On Aug. 2, he cut his rating on Dell Computer Corp. to ``buy'' from ``strong buy,'' saying the No. 1 direct seller of PCs might miss sales-growth forecasts. Dell shares fell 4.8 percent that day. The following week, the company reported second-quarter sales that trailed expectations.
In June 1999, Kumar accurately predicted that Compaq Computer Corp., the world's biggest PC maker, had too much inventory and would have to write down the value of the machines, leading to a loss in last year's second quarter. Analysts had expected the Houston-based company to report a profit. Compaq later warned the week after that it would lose money in the quarter.
Sep/05/2000 11:49 ET |
