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

To: Paul Engel who wrote (62518)	8/17/1998 3:03:00 PM
From: Sonki	Read Replies (1) \| Respond to of 186894

from briefing. who is bearish on intel sez intc 105 yr end INTEL CORP (INTC) 88 3/16 +2. When airlines announce plans to slash prices in an attempt to stimulate demand, the group gets grounded. The same goes for cereals, brews, sneakers, metals, etc... But when Intel does it, the world views the move as a positive. Wait a minute. When did companies begin cutting prices out of some altruistic desire to keep more money in the consumer's pocketbook? Last time we checked, they hadn't. It is a simple supply/demand situation: Intel has been cutting prices on its product because there is an oversupply of high-end chips on the market as consumers continue to move to the sub-$1000 category. Since July 28, when Intel announced price cuts of up to 31% on desktop PC chips, the stock has either been upgraded, reiterated, or initiated no fewer than eight times (including two times today). The reductions marked the fourth time that Intel has cut prices this year (none of which happened to lead to improved earnings). Moreover, the company is expected to announce at least two more rounds of cuts before the year is over, although we are entering what has traditionally been the company's strongest seasons (back-to-school sales this qtr/holiday sales next qtr). So why do analysts think the latest round of price cuts won't hit Intel's bottom-line? Well, this is where it gets tricky. While analysts are quick to issue an upgrade or a reiterate a bullish rating on the stock to the media, they are not so eager to make their earnings revisions known to the public. In Intel's case, Wall Street has been pounding the table on the stock in public, yet cutting estimates in private. According to First Call, 20 analysts have lowered their Intel September qtr estimate over the past 30-days, with the majority of the cuts occurring over the past week or so. The downward revisions have resulted in the mean earnings forecast for the qtr tumbling 15% to $0.73 a share. Don't get us wrong. Just because Intel is trading at 29 times this year's earnings projections, despite an expected 22% decline in EPS, does not mean that the stock can't go higher. In fact, many of the analysts who have made positive comments on Intel over the past few weeks are expecting the shares to hit $100 (+13%) before the year is out. We are simply attempting to make investors aware that not all is rosy in chip land, despite what the bullishly-weighted comments of analysts would have you believe. Intel may go to $100 or $105, or even $115 before the year is out. but it won't be because of improving earnings. Multiple expansion of a company with declining earnings, in a down market. It's an intriguing concept.