Intel's warning means trouble
Morning News Over Easy
March 09, 2001 08:30 AM ET
by Thomas Coyle
RELATED STORIES
• Intel lowers guidance, cites widespread demand softness
NEW YORK -- About all you need to know about trading today is that Intel has issued its fourth revenue warning in less than six months, citing slowing demand for all types of semiconductors.
That means communication, networking and the server businesses have now officially joined PCs in the doghouse.
The lowdown
Intel (INTC) sees first-quarter sales coming in at $6.5 billion, 25 percent off the $8.7 billion revenue it posted for a distinctly lackluster fourth quarter. As a cost-cutting measure, the chipmaker said on Thursday it would eliminate 5,000 jobs, a little less than 6 percent of its workforce.
Back on. Jan. 16, Intel warned that first-quarter revenue could be as much as 15 percent lower than in its fourth quarter -- that would have put sales at around $7.4 billion.
On Feb. 21 the company said it planned to save "hundreds of millions of dollars" by delaying raises, cutting back on hiring and slashing spending.
Prior to the latest warning, analysts had pegged Q1 earnings at 21 cents a share, according to First Call/Thomson Financial down from a gain of 36 cents a share in the year-ago period.
At $33.24, Intel's share price is 56 percent off its 52-week high of $75.81.
Where we start
At 8:25 a.m. ET, Nasdaq futures were down 43.50; Dow futures were down 60.00.
The Upside.com 150 -- an unweighted, pure-play gauge of tech stock performance -- begins the trading day at at 889.88.
The Nasdaq Composite Index starts out at 2,168.73; the Dow industrials begin at 10,858.25.
Unconfirmed
Cisco Systems (CSCO) plans to cut 5 percent of its workforce, according to a report by Reuters.
The company hasn't confirmed that. A Cisco spokesman told Reuters that the company was implementing cost trimming measure -- including a hiring freeze and the ditching some contract employees, as previously announced -- and that the figure of 5 percent was Cisco's normal yearly rate of attrition.
Cisco employs about 48,000 workers, about 5,000 of them are temporary employees.
At $22.81, Cisco's share price is 72 percent off its 52-week high of $82.00.
The Securities and Exchange Commission is investigating the sale of Amazon.com (AMZN) stocks by company Chief Executive Jeff Bezos that transpired just days before the release of a negative report on the company, according to the New York Times.
World Markets
Tokyo stocks limped to the finish line, hobbled by Intel's warning. The Nikkei 225 shed 22.66, or 0.18 percent, to settle at 12,627.90.
Trading was uninspired in Hong Kong as well. The Hang Seng lost 14.60, or 0.10 percent, to end at 14,194.35.
Weak techs did nothing to help the German stock market. At 8:18 a.m. ET, the Xetra Dax was down 9.00, or 0.14 percent, to 6,258.06.
Thwacked telcos pulled the London's FTSE 100 under 6,000. At 8:19 a.m. ET, the U.K. benchmark index was down 22.70, or 0.38 percent, to 5,980.50. |
