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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Paul Engel who wrote (113741)	10/16/2000 7:27:59 AM
From: Road Walker	Read Replies (2) \| Respond to of 186894

Paul, Tomorrows's earnings conference call will be interesting. I can't remember a time when the opinions of analyst's (and investors) on PC sales have been so polarized. Intel investors wait for Q4 guidance October 16, 2000 12:00 AM PT by Michelle Rushlo The worst of the bad news from computer chipmaking behemoth Intel (INTC) may be out of the bag already, but analysts and investors are waiting for a detailed look at what happened in the third quarter and where the company is going in the consumer-centered fourth quarter. Intel, which holds an estimated 80 percent of the PC processor market, already told investors on Sept. 21 that it would fail to meet earlier revenue expectations because of a slowdown in European demand. Analysts have since adjusted their earnings expectations to fit those guidelines, with the consensus earnings estimate at 38 cents per share, according to FirstCall. Intel's warning, coupled with similar warnings from other high-tech companies, have driven Intel's share price down to roughly half its August value, which reached as high as $75.81. Analysts looking for forward guidance But analysts say they are looking to Tuesday's earnings announcement and conference call to offer details about how the revenue estimates went off course and for guidance on the current quarter. David Wong, an analyst at PaineWebber, said the revenue pattern for September will be important because a mediocre but steady September projects much better for the future than a sudden fall-off during the month. He said he does not believe computer or chip demand will suffer in the long term. Gregory Mischou, an analyst at UBS Warburg, said while the environment isn't the best for PCs now, "I don't think the PC is, by any means, down and out forever." The next upgrade cycle, driven largely by Windows 2000, will take hold in the coming months, he said. The spread of broadband will also increase the demand for better-performing PCs, Mischou said. But SG Cowen Securities analyst Drew Peck is more pessimistic. He said businesses aren't upgrading PCs at the rate they used to, and consumer sales, while likely to give Intel a boost during the fourth quarter, will wane at the start of the year. "After Q4, this whole thing goes to hell in a hand basket," Peck said. Intel eventually will rely less on processors and more on the communications businesses they've been buying, he said, but "it will be a long process." Measuring PC makers' optimism Scott Randall, an analyst at Wit SoundView, said how Intel performs in the fourth quarter could largely be a measure of how optimistic PC makers are. Intel's sales and orders depend heavily on what kind of demand PC makers expect to see. "It'll be interesting to see how optimistic they'll be." He said one important question that wasn't addressed by Intel in its September announcement was whether the consumer market, in particular, is seeing more aggressive pricing. Because consumers hold special importance for the last quarter of the year, aggressive pricing combined with larger economic factors could push people toward cheaper PCs, he said. None of the four analysts said the release of the Pentium 4 chip was expected to have a significant effect on the year-ending quarter. "P4 is an important position holder for the company," said Randall. But "I didn't expect the Pentium 4 to be a big revenue runner for the company." Mischou said the important thing for Intel is to get the Pentium 4 chip out in the fourth quarter, which it has said it will do, so that Pentium 4 sales will have an opportunity to build up in the coming year. "It's a compelling product from a performance perspective," he said, but its performance in the market may depend on whether applications come along to push buyers into upgrading. Michelle Rushlo is a reporter at UpsideToday covering big-cap technology companies. If you would like to submit a letter to the editor regarding this story, email online@upside.com.