Thestreet.com doesn't have a rosy outlook for INTC:
thestreet.com
Silicon Valley: Intel Surprise Party Ends in Tears
By Marcy Burstiner
Staff Reporter
10/13/98 8:29 PM ET
SAN FRANCISCO -- Has Intel (INTC:Nasdaq) forgotten that the bulk of its
shareholders expect it to maintain its stranglehold on the chip market?
The chip maker presented an earnings surprise of 9 cents a share Tuesday,
but offered little of what Wall Street really wanted to hear: Indications of
healthy growth in coming quarters and sustained market dominance.
"They said revenue growth will only be up slightly," said David Risgard,
managing director of North Star Asset Management. "That was a little
disappointing. We aren't really excited about the stock."
In its third quarter, Intel posted net income of 89 cents a share, or $1.6
billion, on revenue of $6.7 billion. That gave the company a 9% revenue
growth over the third quarter of last year. While the profit was just one cent
a share over last year's third quarter, it was up 33% from the company's
dismal second quarter. Analysts polled by First Call estimated earnings at
80 cents a share, with the whisper numbers at 84 cents a share in recent
days.
But Risgard and others worry about the coming year. Intel has been losing
market share to Advanced Micro Devices (AMD:NYSE) on the low end of
the chip market, and, on the high end, it's entering the server and
workstation market, where it hasn't yet proven itself. On a conference call
to analysts this afternoon, CFO Andy Bryant ducked every question about
market share, competition and next year's financial health.
Bryant said the ever-quickening turnaround times from PC makers have
made it difficult to predict past a quarter. When asked whether revenues in
the fourth quarter -- historically, the strongest of the year -- might show the
same unexpected growth that the third quarter did, Bryant said, "That's a
possibility, but you won't see us stand up and defend any number too
strongly."
Not quite a rousing forecast. And within the third quarter, Intel gave
investors reason to worry. Despite flat net income, its operating income
dropped 6% quarter-on-quarter thanks to a 18% rise in operating costs.
And the Bryant warned that the company had no easy way to know how it
will be affected by the Asian downturn. "We are playing this one day at a
time," he said.
Intel's stock was trading at 81 1/2 in after-hours trading, more than two
points down from its closing price Tuesday, said Martin Joyce of Mr.
Stock.com. Intel's stock fell 1 7/8 points to 83 9/16 before the conference
call, which took place after the market closed. Some 25 million shares
traded hands, an increase over its average daily volume of 17 million
shares.
© 1998 TheStreet.com, All Rights Reserved. |
