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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Sully- who wrote (52881)	6/7/2002 9:03:49 AM
From: Dealer	Respond to of 65232

Intel Warning Rocks Markets By Igor Greenwald June 7, 2002 INVESTORS WHO believed Intel (INTC) six weeks ago faced another drubbing for their trouble Friday after the leading chip maker shocked Wall Street with a bleak sales warning. Intel shares slid 17% in premarket trading back to their post 9/11 low. The broader market was about to take a fall as well. The Nasdaq-100 trust (QQQ) was down more than 4% in early action, while S&P 500 futures languished 18 points below fair value. The monthly employment report further depressed traders. While the unemployment rate dipped to 5.8% from 6% the month before, job growth of 41,000 payrolls disappointed expectations. And much of the previous months' gain was wiped away when the government revised an increase of 43,000 jobs down to a mere 6,000. Intel dropped its second-quarter revenue target to a range of $6.2 billion to $6.5 billion, at least $200 million short of Wall Street's expectations and $500 million or more below the best-case scenario the company laid out back in April. Gross margin will drop to the neighborhood of 49% this quarter from the prior forecast of about 53%. The combination of lower sales and slimmer margins had most analysts cutting their earnings estimates as well, though Intel provided no guidance on profits. The company blamed weak European sales, but since these accounted for less than a quarter of Intel's global pie, some analysts doubted its problems stopped on the eastern shores of the Atlantic. And while the company continues to hope for a seasonal upturn in the second half of the year, Wall Street wasn't buying; it was selling. "Even on relatively upbeat Q3 and Q4 numbers, we think the stock is expensive, and it is expensive relative to its own history on our 2003 numbers as well," wrote Merrill Lynch analyst Joe Osha, who had downgraded the stock and other chip makers hours before the bad news hit. "We'd love to tell investors that we anticipated Intel's problems, but we did not. What we can say, however, is that expensively valued stocks are poorly prepared for surprises like the one Intel delivered yesterday."