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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: richard surckla who wrote (136343)	4/16/2001 4:09:46 AM
From: tejek	Respond to of 1583713

tejek... Will AMD make their numbers of 39 cents? eom Have they warned otherwise? ted

To: richard surckla who wrote (136343)	4/16/2001 4:09:46 AM
From: tejek	Respond to of 1583713

tejek... Will AMD make their numbers of 39 cents? eom Have they warned otherwise? ted

To: richard surckla who wrote (136343)	4/16/2001 1:19:31 PM
From: tejek	Read Replies (2) \| Respond to of 1583713

Worst Isn't Over -- Analysts See More Trouble Ahead for Chips By Eric Gillin Staff Reporter 4/16/01 10:42 AM ET Semiconductor stocks are dropping after the kind of week that would make any investor happy. The Philadelphia Stock Exchange Semiconductor Index posted double-digit percentage-point gains last week, thanks to a bunch of upgrades early last week from Salomon Smith Barney's Jonathan Joseph. The analyst made a classic valuation call, telling investors to go out and buy eight of the biggest names in chipmaking because they looked cheap at current prices. Well, after days of climbing, the chip index was 5.7% lower this morning. Credit Suisse First Boston, Goldman Sachs and Merrill Lynch have already said that making a valuation call now would be jumping the gun. Now add Lehman Brothers' Dan Niles to the list. "The bottom line is that the macro economic environment continues to be difficult with all PC and semiconductor companies having to adjust their business models to adapt. We think it is too early to call the bottom regarding the fundamentals of Intel (INTC:Nasdaq - news) or the PC and semiconductor industry as a whole," he wrote in a research note this morning. Low Prices + Low Demand = Low Profit Margins As many investors are painfully aware, demand for chips has fallen right off the cliff. Usually, to spark demand, companies will slash prices to entice consumers. Niles says the latest cuts could be detrimental to Intel and the sector. "We believe that steeper-than-expected processor price cuts will lead to lower earnings per share than expected for calendar 2001. Although we believe first-quarter results for revenues and earnings per share will be in-line for Intel, we believe Intel plans about a 50% reduction in Pentium 4 processors by the end of April." Niles said Intel will try to make up some ground against competitor Advanced Micro Devices (AMD:NYSE - news) by dropping the price of its 1.5 gigahertz chip from $637 to $255 per 1000 units, a 60% reduction from March 4. "We believe that when first quarter results are released that Intel will have lost some more market share to Advanced Micro Devices." AMD has been pricing its Althon chip just below the price of Intel's Pentium. Over time, the company has eroded Intel's once unstoppable hold on the market. Misery Loves Company A call from Morgan Stanley Dean Witter analyst Mark Edelstone was also dragging on chips today. Edelstone downgraded Broadcom (BRCM:Nasdaq - news) and Xilinx (XLNX:Nasdaq - news), citing poor demand and rising inventory levels. Both were cut to market outperform from strong buy. Edelstone drastically lowered his earnings estimates on the companies. He thinks Broadcom, once expected to post an 11-cent profit in the second quarter, will come in with a 3-cent-a-share loss. Both the third- and fourth-quarter results were cut to well below prior expectations, and he said conditions will be weak for the rest of 2001. Edelstone cut his 2001 estimate to 10 cents from 55 cents, while he dropped expectations for 2002 results to 60 cents from $1.40. Edelstone's new 2002 estimate for Xilinx is 80 cents, 30 cents lower than his earlier estimate. He trimmed his 2003 estimate to $1.10 from $1.55 a share. Intel was losing 7.6% to $25.98. Xilinx dropped 5.6% to $38.84, while Broadcom fell 11.6% to $31.26. thestreet.com ted