bobby, SPX 1,440 holds today and bounces to close at SPX 1,449 and then INTC pulls the plug on any follow thru bounce with a negative pre-announcement:
From Bloomberg:
Intel Says 3rd-Qtr Sales to Miss Company Forecasts
quote.bloomberg.com
Top Financial News
Fri, 22 Sep 2000, 12:46am EDT
Intel Says 3rd-Qtr Sales to Miss Company Forecasts (Update4)
By Cesca Antonelli
Santa Clara, California, Sept. 21 (Bloomberg) -- Intel Corp., the world's largest computer-chip maker, said third-quarter sales will fall short of forecasts because of weaker demand in Europe. The warning sent Intel shares plunging 21 percent, dragging down other computer-related stocks.
``This has taken all market participants by surprise,'' said Christian Koch, an analyst with Trusco Capital Management, which owns shares of Intel. ``Weaker PC demand has implications for all of the PC food chain.''
Intel said sales will rise 3 percent to 5 percent from the second quarter's $8.3 billion. The company hadn't given a specific target, though spokesman Tom Beermann said sales will be less than Intel anticipated. Gross profit margin also will be worse than expected.
Several analysts have expressed concern in recent weeks that demand for consumer personal computers has slowed, saying the recovery that usually comes with the back-to-school season hasn't materialized yet. European sales accounted for 22 percent of Intel's revenue in the second quarter.
The shares of Santa Clara, California-based Intel traded as low as 48.38 after the announcement. They had fallen 1.58 to 61.48 today. The stock had risen 49 percent this year.
The decline represents a $77 billion drop in Intel's market value, one of the biggest wipeouts in history. At today's close, the company had a market capitalization of $412.8 billion.
The company declined to comment on whether third-quarter earnings would meet forecasts of 41 cents a share, the average analyst estimate in a First Call/Thomson Financial survey. Analysts expect sales of $9.07 billion, the average forecast of five polled by IBES International Inc.
Falling Shares
The warning sent shares of other chipmakers and computer- related companies plunging on investor concern that slack demand at Intel, the world's third-largest company by market value, may indicate that the entire industry is slowing.
Advanced Micro Devices Inc., Intel's main rival in the microprocessor market, dropped as low as 23.75 after closing at 27.56 on the New York Stock Exchange.
Microsoft Corp., the world's largest software maker, slid to 60.50 after closing at 64.19. Micron Technology Inc., the biggest U.S. maker of computer-memory chips, slid as low as 54 after closing at 62.50. Dell Computer Corp. declined to 33.75 from 37.94 at the close, while Compaq Computer Corp. reached 27.75 after closing at 30.88 on the NYSE.
Applied Materials Inc., the biggest maker of chip- manufacturing equipment, dropped to 66.50 after closing at 73.50, and Texas Instruments Inc. fell to 53.50 after closing at 57.31 on the NYSE.
Intel last warned that results would miss expectations in March 1998. The company's shares fell 13 percent the next day.
Previous Forecast
Last week, Intel said it was still comfortable with predictions it made in July, when it said sales in the current period would rise from the second quarter's. The forecast was Intel's most positive outlook for the third quarter in more than five years. In previous years, it said only that sales would be ``up slightly'' or ``flat to slightly up.''
``Intel has maintained up until now that everything was fine for the quarter, and indeed as the Piper analyst said, all is not right,'' Banc of America Securities analyst Rick Whittington said, referring to U.S. Bancorp Piper Jaffray analyst Ashok Kumar.
Kumar said two weeks ago that demand had slowed and that unit sales growth would be ``well below consensus expectations.'' He wasn't available to comment today.
Gross margin, or the percentage of sales left after subtracting manufacturing costs, will be 62 percent. That's narrower than the 63 percent to 64 percent previously estimated, the company said today.
Excluding acquisition-related costs, the chipmaker earned a pre-split 55 cents a share in the year-ago quarter on sales of $7.33 billion.
Corporate, Consumer Demand
Intel didn't give any details about which product lines have been hurt the most. Analysts and executives have said both corporate and consumer PC demand has fallen in Europe as anxieties about local economies rise.
Most of the chipmaker's European sales come in late during each quarter, so Intel didn't realize there would be problems until this week, said Graham Tanaka of Tanaka Capital Management, an Intel shareholder.
Plus, the euro has declined about 9.73 percent against the dollar during since June 30. Without the effect of converting its sales outside the U.S. into dollars, the company would post higher revenue, Tanaka said.
Analysts and investors said it's not clear whether sales will pick up during the fourth quarter. Analysts said Intel's estimate for full-year gross margin of 63 percent meets current expectations, which indicates that margins will improve enough next quarter to make up for missing targets now.
The chipmaker is expected to earn 46 cents a share in the fourth quarter, according to First Call.
``The jury is still out for Q4,'' Whittington said.
Demand for other electronics gear such as cell phones and organizers is still rising, and PC sales in the rest of the world are still strong, Tanaka said. Intel still doesn't have enough capacity to ship as many processors as customers need. That makes some investors more optimistic about the holiday season.
``We don't know, but the fourth quarter is usually very, very kind to Intel and the industry,'' Tanaka said. ``In the U.S., Asia and Latin America the fourth quarter will still be pretty strong.''
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I guess Prez Bill still holds a wild card to tap into the oil reserves for some silver lining. lol
Best Regards, J.T. |
