shane, two CNNfn stories:
Intel issues profit warning
Sluggish orders to translate into lower than expected 1Q profits, revenues
Intel warning sparks selloff - March 4, 1998: 9:03 p.m. ET
Intel's warning marked a significant retreat from the company's
earlier guidance when Intel projected flat revenue compared with the
fourth quarter. Industry analysts attributed Intel's woes to a
build up of inventories among PC makers. "There's excess inventory
of PC's in the channel that's really hurting Intel," said Megan
Graham-Hackett, technology analyst at Standard & Poor's. "It's not
being able to sell to the Compaqs and IBM's and HP's so it's basically
they can't record those sales, so revenues are worse than expected."
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With the advent of the "sub-$1,000" PC, Intel has seen its gross
margins slide from as high as 61 percent during the first nine months
of 1997, despite its dominant market position. The Pentium line sells
for roughly $100 to $200 per unit when bought in bulk.
In the past, Intel was able to protect its profit margins by
introducing faster and faster chips that quickly became the benchmark
for the PC industry. However, in recent months, as demand for the
sub-$1,000 PC has grown, computer makers have turned to cheaper chips.
"They're saying its broad-based. It's clearly related to Compaq ...
the sub-$1,000 PC phenomenon is hurting the (average selling prices),"
Chaplinsky said.
"However, we thought unit demand would remain healthy because top tier
PC makers were bullish going into the quarter," he said.
cnnfn.com
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Intel warning sparks selloff
Chip giant's forecast sends shock waves through tech industry
March 4, 1998 : 8:58 p.m. ET
NEW YORK (CNNfn) - Intel Corp. sneezed Wednesday and
the rest of the technology sector quickly got a cold.
cnnfn.com
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