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To: Lucretius who wrote (51864)	9/23/2000 1:46:46 AM
From: DJBEINO	Read Replies (1) \| Respond to of 53903

Analysts Say `I'm Sorry' After Getting Caught Flat-Footed by Intel Outlook By Chelsea Emery New York, Sept. 22 (Bloomberg) -- It's not very often you hear a stock analyst say, ``I'm sorry.'' That's exactly what analysts who follow Intel Corp. were saying this morning after they were caught flatfooted by the computer-chip maker's warning that sales would miss forecasts. Dan Niles of Lehman Brothers went so far as to start a note to clients with: ``We apologize.'' ``If you're playing with people's money and you tell them it's going to be okay and you screw up, you have to be willing to say you're sorry,'' Niles said in an interview. He faulted himself for underestimating weakness in Intel's European sales. Niles wasn't the only sheepish analyst today. Across Wall Street, firms were fielding calls from clients about what went wrong with Intel. It was a reminder that even in an age when analysts earn seven-figure salaries and enjoy a steady stream of information from the companies they follow, they still can be as surprised as any investor by a bad quarter. ``Analysts couldn't have seen this coming,'' said Linda Ray, who manages money for Northstar Group. Intel was her second- largest holding before today's decline. ``It was totally shocking news.'' Intel shares plunged 13.55, or 22 percent, to 47.94. Volume of more than 308 million shares was the most ever for a U.S. stock. The decline slashed about $91 billion from its market value. More Apologies Richard Whittington of Banc of America Securities made his own apologies for upgrading Intel one notch to a ``buy'' three days ago, just a week after downgrading it two notches to ``market perform.'' ``It was the wrong thing to do,'' said Whittington. Money manager L. Roy Papp said he couldn't remember any time in his 45 years of investing when an analyst apologized for a bad call. ``I give them credit,'' said Papp, whose Phoenix-based firm manages $1.2 billion and owns Intel shares. The extent to which analysts were caught off guard by Intel was illustrated by the slew of downgrades. Eleven of the 28 Intel analysts tracked by First Call/Thomson Financial cut their rating on the stock today. While downgrades after a disappointing forecast are common, outright admissions of mistakes are rare, investors said. ``I think analysts should apologize more often than they do,'' said John Forelli, who helps manage $30 billion at Independence Investment Associates in Boston. One analyst who didn't have much to regret was Ashok Kumar of U.S. Bancorp Piper Jaffray, who warned clients three weeks ago that sales growth could lag and cut his rating to ``buy'' from ``strong buy.'' Kumar was soaking in the attention today as the man who saw it coming, including appearances on Bloomberg Television and CNBC. Leaving Rating Unchanged Kumar said he didn't think another downgrade was warranted now given Intel's decline. Niles agreed. ``Your first thought is to hurt them, to get even and say, `I'm just going to downgrade,''' Niles said. Instead, his cooler side prevailed. As about 40 calls poured in from clients, he told them to hold onto shares or buy more. ``It's at times of market panic that you make the most money,'' he said. Deutsche Banc Alex. Brown analyst Erika Klauer took the opposite tack, slapping the firm's lowest rating on the stock ``market underperform'' in a drastic downgrade from the firm's highest rating of ``strong buy.'' In a release after the close of U.S. markets yesterday, Intel said third-quarter sales will rise 3 percent to 5 percent from the second quarter's $8.3 billion, below some analysts' forecasts for growth of as much as 10 percent. Europe the Key The company blamed weak demand in Europe. Many analysts said they'd anticipated Europe would be a problem but expected the company would offset it with sales elsewhere or by spurring sales through discounts or other means. ``I think Europe's going to snap back,'' said Whittington at Banc of America. Whittington maintained his ``buy'' rating, though he cut his third-quarter earnings-per-share estimates by four cents to 38 cents. He said the shares could reach 65 in a year, down from his earlier 70 estimate. Whittington's note today didn't mention his upgrade of the shares only three days earlier. Instead, it ended on a plaintive note. He wrote, ``There's nothing more to say.''