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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (44098)	3/20/2001 7:38:47 PM
From: Proud_Infidel	Read Replies (2) \| Respond to of 70976

Intel CEO Still Hopes for Second Half PC Rebound By Yukari Iwatani LAS VEGAS (Reuters) - Craig Barrett, chief executive of No. 1 chip maker Intel Corp., said on Tuesday he continues to hope for a recovery in demand for personal computers in the second half of 2001, despite the current major slump in the industry. The European market is ``okay'' and, as expected, the United States was the company's ``primary weak point,'' Barrett told Reuters in an interview at the Cellular Telecommunications Industry Association conference here. Barrett's comments come after Intel (NasdaqNM:INTC - news) issued its third consecutive sales warning earlier this month saying that first-quarter sales would fall as much as 25 percent to about $6.53 billion from the previous quarter as an economic slowdown spread beyond personal computers to networking, communications and server components. ``We're still hoping for a recovery in the second half,'' Barrett said, who also added that the Asian market should be strong but didn't provide specifics. Some analysts have gone so far as to argue that the U.S. technology industry has entered a recession and that the PC market would indeed shrink from a year ago in 2001 for the first time in its history. US Bancorp Piper Jaffray analyst Ashok Kumar said in a note to clients on Monday that the second half of 2001 will in fact not be a period of recovery and should ``result in negative unit growth for the PC market in 2001, a first in its history.'' ``We do not believe that there will be a sustainable cyclical recovery until'' the second half of 2002, Kumar wrote. Also, Salomon Smith Barney analyst Richard Gardner wrote in a note to clients on Tuesday that the ``most recent U.S. PC retail sales data indicates ongoing weakness in the consumer market'' for the week of Feb. 25 through March 3, with growth declining a steep 21 percent. Banking On A Rebound, New Businesses But even as Intel and other firms in the high-tech sector suffer through a slump, Intel says it still plans to spend $7.5 billion this year to move to more efficient and cheaper chip-making technology and larger silicon wafers, which also help to cut costs. ``We know it's is going to recover,'' Barrett said of the economy. Intel has also been making aggressive pushes in recent years to broaden sales beyond microprocessors for personal computers, servers and laptop PCs, which account for about 80 percent of overall Intel revenue and virtually all its profit. For example, Barrett said that its networking and communications group, which combines two of its previously separate units, now contributes 20 percent of the company's revenue. In the long-term, which Barrett didn't specify, he expects that figure to grow to 50 percent. Also, Intel's Pentium IV chip, its newest chip, will hit its stride by the end of this year in desktop computers, Barrett said, which is when Intel plans to roll out the Pentium 4 with 0.13-micron technology in large quantities. ``I expect it to be the fastest growing microarchitecture ever,'' he said.

To: Proud_Infidel who wrote (44098)	3/20/2001 8:40:22 PM
From: Ian@SI	Read Replies (1) \| Respond to of 70976

Brian, Agree that money has been exceptionally tight; and, IMO, for far too long. That doesn't change the aggressive easing that is now in progress; and that will continue until sufficient signs of results become apparent. If one looks at housing starts and Housing Permits issued (the best predictor of future housing starts), one would be hard pressed to forecast any recession coming any time soon. I don't follow the auto industry, but several talking heads have stated the inventory overhang will be done this Q (2 more weeks) with a sharp pickup during the next Q. I don't like to accept unverified info from talking heads even though I've heard the same story from what seems to be at least 3 distinct sources. So give that one a probability somewhat less than 1. And the Fed Funds rate has come from 6.5% to 5% in less than 3 months. If anyone had seriously suggested this rate of easing by the Greenspan Fed last December, they probably would have been committed. And the rate of inflation for January was 3.7% (I suspect this was an aberration due to energy prices; and will trend down closer to 2.5%) Thus today's funds rate is 5%-3.7% or a Real Interest rate of 1.3% about 1/2 of the historic average. This is a rather easy policy not an abnormally tight policy. And if one compares that with the beginning of this year (6.5%-3.7% = a real rate of 2.8%), that wasn't far off the average - a little toward the easing side. And this is the difficult part for the tech investors. If one looks at most economic measures, the economy is going through a speed bump rather than a major event. For the tech side, the story couldn't be more different. FWIW, Ian.

To: Proud_Infidel who wrote (44098)	3/20/2001 8:45:35 PM
From: mitch-c	Read Replies (1) \| Respond to of 70976

All correct, but. Those are gradual long-term influences, and I suspect we'll see some short-term shocks in the next month ... say, until April options close. 1) All news will be "bad" news. AG and the Fed Board couldn't win this time. 1/4 point cut would have been seen as too little, therefore bad; 1/2 as expected, but still too little for some, therefore bad; 3/4 or more as an indicator that the Fed saw the "Recession" boogeyman closer, therefore still interpreted as bad. 2) Tax season / tax selling. Many folks sold out at a profit - albeit less than the peak - last year, and may be shocked at the Cap Gains they owe after a "bad" year. Expect them to raise cash for the tax bill by selling - a seasonal phenomenon. 3) SCE BTB will remain less than 1 - probably by a substantial amount. Always sucks the bears out of hibernation. On the other hand, the April Max-Pain point stands at 50, with 47.5 as a very close second. We're nearly three option steps below 50, so I'd expect the prevailing tendency to be upward in an information vacuum. So, the climate I expect to operate in is a tendency to the high 40's, taking advantage of spikes downward (like today) or up above 50. I think I'll grab some calls soon. - Mitch