Here is the article that I was referring to:
Dow Jones Newswires -- April 14, 1998
Street Sees Intel's Rough 1Q As Ancient
History,Looks To 2Q
By Christopher Grimes
NEW YORK (Dow Jones)--Intel Corp. (INTC) isn't expected to give
investors much to smile about Tuesday afternoon when it reports
first-quarter earnings.
Because the company told investors in early March that revenue would
probably fall 10% from the fourth quarter, analysts aren't putting much
stock in whether it beats expectations.
Incidentally, they don't see that happening.
First Call's consensus estimate is 72 cents a share, including a 9-cent charge
from the Chips & Technologies Inc. purchase in February. In first quarter
1997, Intel earned net income of $1.10, as adjusted for a stock split.
SoundView Financial Group analyst Scott Randall said word is that the
company will report earnings in line with "or slightly below" the consensus
estimate.
"I'd say they will be a little light." Randall said.
It seems the so-called "whisper number" - the unofficial, last-minute
estimate that circulates around Wall Street - is faint this time around.
One options trader noted that "the volume is kind of thin. It looks like
they're predicting a nonevent."
Added Randall: "This has not been a quarter for whispers. Everybody's
much more interested in what the outlook will be."
For the current quarter, most analysts expect a tepid outlook, mainly
because of flat chip orders. Opinion about the rest of the year is divided.
How much Intel says it will spend on equipment is one way Wall Street will
try to gauge the company's expectations for the second half. If spending to
upgrade factories declines, the thinking goes, Intel apparently expects rough
sailing. But, holding spending at the projected $5.3 billion level would
indicate a more optimistic view.
"If they cut spending to $4.5 billion, they're looking at a tough year," said
David Wu, an analyst at ABN AMRO Inc. "If they only cut it to $5 billion,
they expect a good second half. Watch what they do, not what they say."
Another closely-watched figure will be gross profit margins. An increasing
number of Intel's chips are Pentium IIs, which are less profitable because
costs for packaging and enhanced features are higher than in
previous-generation chips.
Piper Jaffray Inc. analyst Ashok Kumar expects Intel to predict a continued
decline in profit margins. When the company preannounced first-quarter
earnings in March, it said margins would be down 17% from a year ago.
"That means we probably won't get positive numbers until the fourth
quarter," Kumar said.
In afternoon trading, Intel shares were up 5/8, or 0.8%, at 76 7/8 on
volume of 9.5 million shares, compared with a daily average of 18.1 million
shares.
The company will report its earnings at about 4:15 p.m. EDT.
-Christopher Grimes; 201-938-5253
Larry |
