Intel Rises 8.8% as Investors See Sales Rebounding (Update4)
10/13/0 16:31 (New York)
Intel Rises 8.8% as Investors See Sales Rebounding (Update4)
(Adds stock's decline this year in second paragraph.)
Santa Clara, California, Oct. 13 (Bloomberg) -- Shares of
Intel Corp., which last month said third-quarter sales would miss
its targets, rose 8.8 percent as investors bet the No. 1 computer-
chip maker will rebound next year.
Intel rose 3.25 to 40.38 in trading of 80.4 million shares,
making it the most active in U.S. markets. The stock has dropped
47 percent since hitting a record 75.81 on Aug. 28 and has fallen
about 2 percent this year.
Sales didn't grow as much as expected because of weaker
demand in Europe, the company said on Sept. 21. That sparked
concern about a broader personal-computer industry slowdown and
sent technology stocks tumbling. Yet, many investors said they're
convinced that sales in Europe will rebound next year, and demand
for processors that run PCs and networking gear remains intact.
``Demand now is not as strong as the industry expected it to
be earlier in the year,'' said Brian Eisenbarth, a portfolio
manager with Collins & Co., which owns 75,000 Intel shares. ``The
growth rate is still there, it's just not going to be as high as
originally anticipated.''
Questions persist about when sales growth will pick up again,
whether Europe is the only region affected by lower consumer PC
demand, and increasing competition from Advanced Micro Devices
Inc.
Intel on Tuesday is forecast to report profit of 38 cents a
share, the average analyst estimate in a First Call/Thomson
Financial survey. The company earned a split-adjusted 28 cents a
year earlier. Sales are forecast rise 18 percent to $8.64 billion
from $7.33 billion, the average estimate according to IBES
International Inc.
Lower Estimates
Analysts have trimmed an average of 6 cents off their profit
forecasts for this year and lowered expectations for next year by
10 cents to $1.76 a share, according to First Call. They've
chopped $834.4 million from 2000 sales targets and $900.4 million
from 2001 figures, bringing estimates to $34.5 billion for this
year and $40.5 billion next year, according to IBES.
``We need a little reassurance,'' said Larry Borgman, an
analyst with Josephthal & Co. with a ``hold'' rating on the stock.
First Call's forecasts include investment gains and exclude
amortization of goodwill. Profit in the year-ago period excludes
acquisition-related costs.
Intel's fourth-quarter forecast will dictate the stock's
moves after the report, investors said. Since Apple Computer Inc.
and Dell Computer Corp. said revenue won't meet estimates,
analysts have worried that computer sales during the crucial
holiday season may not rebound enough.
``People will be wanting to hear, `Look for a seasonally
strong fourth quarter.' If it doesn't happen, people will be very
upset,'' Borgman said.
New Products
The Santa Clara, California-based chipmaker has some key new
products coming, including the much-touted Itanium processor for
server computers than run corporate networks and Web sites and the
Pentium 4 for desktop machines.
Some investors, including Eisenbarth, said revenue in Europe
will be hurt this year and bounce back in 2001. They see chips
penetrating new markets, lifting Intel's sales in coming months.
Other shareholders are less certain. The high single-digit
sales growth rate some expect for Intel's fourth quarter won't be
enough to help the stock in a market that prefers communication-
chip makers that don't have exposure to the PC market, they said.
``Even if (Intel) puts up strong numbers, people are going to
be like, yawn,'' said John Spytek, an analyst with Banc One
Investment Advisors. ``People in general are going to be bored
with it and ignore the PC names.''
--Cesca Antonelli in the San Francisco newsroom (415) 743-3532, or
at fantonelli@bloomberg.net/jac/atr/pkc/dfr
Story illustration: For a graphic of Intel's quarterly earnings,
see {INTC US <Equity> DES5 <GO>}. For a chart of full-year
results, see {INTC US <Equity> ERN <GO>}.
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-0- (BN ) Oct/13/2000 20:31 GMT |
