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To: Dave B who wrote (22902)	6/18/1999 11:00:00 AM
From: jopawa	Read Replies (1) \| Respond to of 93625

Semiconductors Intel Scrambles for Summer Chip Release By Marcy Burstiner Staff Reporter 6/18/99 9:48 AM ET URL: thestreet.com SAN FRANCISCO -- Intel (INTC:Nasdaq), heading off Wall Street concerns about new products, set plans to release a 600-megahertz Pentium III processor this summer. Intel is working on an all-new 600-MHz Pentium III model, called Coppermine, whose new 0.18-micron process technology should enable a substantial advance in performance. But that chip won't be available until later in the year. So this summer, as a stopgap measure, the leading chipmaker will introduce a 600-MHz Pentium III processor on its current 0.25-micron process, Intel spokesman Tom Waldrop told TheStreet.com. Meanwhile, Advanced Micro (AMD:NYSE) in July will start selling its long-awaited K7 chip at initial speeds of 550 MHz. AMD is hoping to sell K7s that top 600 MHz by the end of the year. In May, Intel released its 550-MHz Pentium III, the fastest PC chip on the consumer market. The timing is important because, in the past, summer product introductions have coincided with a rise in Intel's stock price. Between July 4 and Aug. 8, 1997, for example, Intel's stock rose 37%, while the Philadelphia Semiconductor Index rose 21%. Last year, despite a general slump in the chip industry that produced a spate of earnings warnings, Intel stock rose 23% between June 12 and Aug. 21, while the SOX rose just 2%. Intel's stock dropped 1 11/16, or 3%, to 58 Thursday after Credit Suisse First Boston analyst Charlie Glavin said in a report that Intel doesn't have a significant new processor line to offer this summer. In the summer of 1995, Glavin wrote, Intel launched the 133-MHz Pentium and a year later it was the 200-MHz Pentium. In the summer of 1997 came the Pentium II, and last year Intel launched its improved and much-celebrated Celeron line. "This year, however, the only processor introductions planned for speed increases are existing Celeron and Pentium II mobile processors," Glavin wrote. Glavin, who maintains his buy rating on the stock, cut his 1999 earnings estimate to $2.25 per share to $2.32 per share and his 2000 earnings estimate to $2.55 per share from $2.65 per share. Intel earned $1.77 in 1998. Adding to Intel's worries, PC maker Compaq (CPQ:NYSE) Thursday gave chip investors another wake-up call in the form of an earnings warning that cited continuing pricing pressure. Compaq warned second-quarter revenue would be flat or lower than the first quarter and that it could post a loss as large as 15 cents a share. The First Call consensus had forecast a 20-cent profit. Waiting for Good News Intel vs. Philadelphia Semiconductor Index, Jan. 1-June 17 Source: BigCharts Intel rose to an all-time high of 71 in mid-January before drifting down to 50 1/8 on June 1, a level it hadn't seen in nearly six months, amid concerns about pricing pressure. A forecast from the Semiconductor Industry Association that chip sales would increase 12% this year over 1998 levels brought Intel back up to 59 11/16 Wednesday. Regardless of whether Intel can deliver on its promise for a new chip this summer, investors who have chosen to hold onto the stock remain focused on the company's biggest draw: Intel has historically dominated the chip market, allowing it to boost profits despite pricing pressures. "We like Intel," says Doug Mackay, portfolio manager of the $1.6 billion White Oak Growth Stock Fund in which Intel is one of the top holdings. "We think it will do well in the long run. Pricing has always been a factor in the market for PCs, but it is also been a volume game and a growth market with large opportunities and that will offset the pricing pressures." Whether Intel can keep its edge over AMD in the high-speed chip market may not be the central question. Many analysts say Intel's biggest problem right now is that consumers prefer to buy its low-priced, lower-performance Celeron chip, rather than its more expensive, more powerful and more profitable Pentium III chips. Will Hickey, an analyst with Anchor Capital Advisors, said his fund does not hold Intel, but he's thinking about buying if the stock drops to around 50 again. At the current price he's staying away, because the near future is so uncertain. Intel should name its next chip line: Pentium IV Titanium AMDCrushium Profitmaximum Stockliftium See Results -------------------------------------------------------------------------------- © 1999 TheStreet.com, All Rights Reserved.