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Technology Stocks : Dell Technologies Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Sig who wrote (152630)	1/29/2000 10:59:00 PM
From: calgal	Respond to of 176387

Sig, Hi! What will Dell do about Intel? :)Leigh smartmoney.com January 27, 2000 5:15 PM Do Dell?s Woes Signal Trouble Ahead for Intel? By Monica Rivituso After Dell Computer?s (DELL) warning late Wednesday that it would miss fourth-quarter revenue and earnings estimates, some analysts are musing about the implications for other companies. And Merrill Lynch is wondering what Dell?s travails might say about chip giant Intel (INTC). Y2K and semiconductor-supply constraints were at the heart of Dell?s trip-up. The PC maker said earnings would come in roughly five cents lower and revenue would only (we know, only with Dell could you use this adverb) grow in the 30% range. Y2K is arguably about as one-time an event as you can get. And many analysts agree that Intel?s difficulties in meeting chip demand (namely with ramping up its high-end Coppermine Pentium III chip and Rambus memory chipsets) aren?t as much of a problem now. But Dell?s management also raised the issue of demand. And according to Merrill?s Joseph Osha (a Wall Street Journal All-Star), that?s another question entirely. Dell CFO Tom Meredith said that after the threat of Y2K had passed, large corporate and institutional clients didn?t start buying products as quickly as management figured they would. That means demand didn?t pick up as sharply as expected in January. What?s more, management didn?t indicate that February would be a big rebound month either. "Those observations are at odds with Intel?s forecast of a smaller-than-expected seasonal downturn in the first quarter," Osha said in a brief note this afternoon. "Although it?s hard to tell what?s happening, we think that Intel may have assumed that resolving its Coppermine problems was all that needed to happen in order to continue ramping revenues ? actual demand softness did not enter into the calculation." So what does that mean for chipmakers in the first quarter? Possibly more price softness, according to Osha. Although he?s been expecting lower chip prices, it seems this new sign of weakening demand could make matters worse. As it is, Intel was already facing pricing pressure from its competitor Advanced Micro Devices (AMD), which is ramping up its fastest version of its Athlon chip, which competes with the Pentium III. Cheaper chip prices might be good news for PC makers, but not for semiconductor companies, makers of memory chips included, Osha explains. Even so, he still likes Micron Technology (MU) at this level, as the memory chip market is expected to be "extremely tight" during the second half of this year. As for Intel, Osha recommends a "more conservative stance." "We don?t see supply tightness being as much of a factor in the second half [for Intel], and we think holding the line on pricing during the first quarter is going to prove increasingly challenging," he said. Intel escaped the tech selloff today ? in fact shares of the chipmaker ended the day up nearly 1.7%. Nevertheless, it will be interesting to see how the semiconductor behemoth fares as more people digest the implications of Dell?s announcement.