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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Amy J who wrote (82976)	6/7/1999 7:59:00 AM
From: Stonehenge	Read Replies (3) \| Respond to of 186894

Anyone see this garbage??? Bottoming at 40??? Update - Intel, which has seen the market for PC chips become increasingly commodity based, has made several major investments. The Company announced a $780 million all-cash bid for Dialogic, a maker of hardware and software that integrates computer and telephone functions. This acquisition fits well with past acquisitions of Level One Communications, a maker of networking chips, and Shiva, a solutions provider for network access equipment. Intel is attempting to integrate these functions with future chip designs. The Company also announced a $200 million investment in Wiliams Communications, which is developing a long-distance fiber optic communications network in the Unites States. The Company also announced an equity investment in Sente, Inc. a software design firm. We understand that Intel is increasingly considering expanding their investment relationships with Broadcom (BRCM). This could result in the outright acquisition of BRCM or a broadening of strategic partnerships. Stay tuned. Intel's stock remains overpriced at $53 and we expect it to bottom at $40. Original Research - As originally reported 2 months ago, we expect a major seasonal slowdown in computer sales. We recommended that investors avoid Compaq and Dell and stick to diversified and service based companies including IBM and Wang. Since that time, Wang was purchased by Getronic NV of the Netherlands (a return of about 40%) and IBM's stock has skyrocketed. This week, we had our analysts take a look at the bellwether chip maker - Intel. Revenue Growth - Intel faces extraordinary business issues in 1999. Competition in the value PC market segment, inventory corrections among large customers and economic slowdowns in Asia and Europe are contributing to weak financials. With increasing price pressures and declining ASPs, we expect that Intel will report revenue shrinkage for the first time. The Internet is a problem for Intel - Close to 50% of US households now have a computer in their home. Semiconductor companies such as Intel and AMD have tremendous capacity to make old but still acceptably fast computer chips. Current software requirements are increasingly being handled by these older technologies. In prior years, Intel counted on PC buyers who consistently upgraded old and slow processing PCs to handle new spreadsheets and word processing demands. This is no longer the case. PC's produced in 1997 are more than capable of handling today's Internets requirements. New software such as Microsoft 2000 will not drive upgrades. Neither will the Internet. The Internet is driving upgrades to modems and bandwidth related equipment. Increased Acquisitions - Intel is increasingly turning to acquisitions to develop new business lines and respond to industry shifts. Recent acquisitions include Case Technology, Dayna Communications and Shiva Communications. Intel has also made more than 100 new equity investments to help spur increased demands for their chips. We expect that Intel will increasingly turn to larger acquisitions. As discussed in our research report on 3COM and Broadcom, Intel is considering strategic investments in these companies. We believe that Intel's stock is overvalued relative to historical revenue growth and earnings. We expect the stock to trade down to a $40 level before the end of the summer. We caution against purchasing large blocks of Intel or other companies including Dell and IBM prior to this decline. Although we have downgraded IBM due to valuation concerns - this remains our favorite computer related stock. Investors who currently have large profits in hardware related technology stocks will benefit by reducing their holdings. Patient investors who can wait for these major price declines will benefit significantly. Once prices have stabilized, investors should begin dollar-cost averaging purchasing programs.