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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Charles R who wrote (61402)	6/11/1999 2:33:00 AM
From: Cirruslvr	Respond to of 1572139

Chuck - PM = personal message, but nevermind if you will do that

To: Charles R who wrote (61402)	6/11/1999 2:33:00 AM
From: RDM	Respond to of 1572139

Edelstone is looking off the mark SAN FRANCISCO -- Back in January, Morgan Stanley Dean Witter semiconductor analyst Mark Edelstone seemed like one smart cookie with his bullish call on Intel (INTC:Nasdaq). But increasingly, with his strong buy rating intact as Intel's stock slumps, Edelstone is looking off the mark. Edelstone upgraded the giant chipmaker to a strong buy in April of 1998, when many on Wall Street believed the stock would continue to struggle. TheStreet.com crowned Edelstone the Intel ax right when the stock began a rebound in late August that ended in January with a 98% price gain. Now Intel is 27% below its January high of 70 15/16, and Edelstone is sticking to that same rating. He reiterated it Wednesday, citing Intel's growth potential from announced acquisitions of Level One Communications (LEVL:Nasdaq) and Dialogic (DLGC:Nasdaq), companies that make networking products. (Morgan Stanley is an underwriter of Intel.) Stock Goes Cold, but Edelstone Won't Fold Stock price of Intel since April 15, 1998 Source: Baseline So who's looking good? The first Intel bull to turn was Donaldson Lufkin & Jenrette's Charles Boucher, who downgraded the stock to market perform from buy on March 1. The next day, Jonathan Joseph, then an analyst at NationsBanc Montgomery Securities and now at Salomon Smith Barney, downgraded Intel to hold from buy. (Neither DLJ nor NationsBanc has an underwriting relationship with Intel.) "We believe it is dead money at best going into the summer," Joseph said at the time. Those calls have proven solid. Between March 2 and June 2, Intel dropped 5%, while the S&P 500 rose 6%, the Nasdaq Composite Index advanced 8% and the Philadelphia Stock Exchange Semiconductor Index gained 14%. BancBoston Robertson Stephens analyst Dan Niles waited until April 12 to downgrade the stock to long-term attractive from strong buy. All three analysts have warned that consumers are lining up to buy Intel's cheap Celeron chips at the expense of its more-profitable Pentium III chips, a trend that's driving down Intel's average sales prices and profits. (BancBoston has no underwriting relationship with Intel.) But unlike Boucher and Joseph, Niles isn't just warning about the June quarter -- historically a slow time for the chip industry -- but for the third and fourth quarters as well. That means that Niles expects the Christmas season will be a bust for Intel. "I will continue to recommend that people lighten up on the stock, sell the stock," he said Thursday. Investors can't ignore the competitive risk from rival Advanced Micro Devices (AMD:NYSE) either, Niles warns. "The K7 from AMD will be launching at the end of June at speeds greater than ... 600 MHz," he says. "This will be the first time since the 386 [MHz chip] that AMD has had a competitive product with what Intel has on the high end. And this will obviously start to put pressure on pricing on the high end for the first time." For Niles to write off the last half of the year is gutsy. Last year around this time, Merrill Lynch analyst Thomas Kurlak, who then held the ax title, made a similarly bearish call on the Christmas season that turned sour. Kurlak left Merrill in February to join the Tiger Management hedge fund. (Merrill Lynch is not an underwriter of Intel.) Edelstone isn't the only Intel bull out there. Merrill Lynch analyst Joe Osha anticipates Intel will report earnings of 55 cents a share this quarter. Friday morning, he said strong sales of Intel's high-end server chips and manufacturing-cost reductions would make up for any decrease in average sales prices from the popularity of the Celeron. Plus, he expects a gangbuster Christmas season to boost year-end earnings to $2.41 a share. "If things get cheaper, you sell more of them," Osha told TheStreet.com. "U.S. retail is going wild, and things are getting better overseas." And at BT Alex. Brown, analyst Erika Klauer is dismissing the bears' concerns about pricing pressure and sticking with her strong buy rating. "We do not share these views and believe that Intel's current quarter is still on track," she wrote on May 6. "We see a solid pricing environment overall. All Pentium III products appear to be holding firm in pricing against a backdrop of solid demand." (BT Alex. Brown is not an underwriter of Intel.) But 11 days later after Klauer's research note, Intel dropped its Pentium III prices 35%. Oh well.