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Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: Alan Hume who wrote (18612)	4/14/1999 6:35:00 AM
From: MileHigh	Read Replies (1) \| Respond to of 93625

The Marcy "I love RMBS" beat, RMBS mention at end... Intel Serves Chips Lukewarm This Quarter By Marcy Burstiner Staff Reporter 4/13/99 9:18 PM ET SAN FRANCISCO -- Don't write the epitaph for the PC yet. That's the word from Paul Otellini, general manager of Intel's (INTC:Nasdaq) Architecture Business Group. "Compaq (CPQ:NYSE)," Otellini said, "is not the entire market." In the wake of Compaq's warning of a surprisingly weak quarter, Intel held a conference call to discuss its first-quarter earnings and its outlook. Neither looked particularly good to Jon Joseph, former Nationsbanc Montgomery Securities analyst who recently made a jump to Salomon Smith Barney. (Smith Barney is not an underwriter of Intel.) "I think revenues were light and the outlook was cautionary," Joseph said. Intel reported first-quarter net income of $2 billion on revenues of $7.1 billion, up from income of $1.3 billion on $6 billion in revenues a year ago. That produced earnings per share of 57 cents, two cents above analysts' expectations. Otellini's was among the healthiest divisions. Intel's architecture products include microprocessors, motherboards and other PC and server-based products. The division produced an operating profit of $2.8 billion, a 46% increase over the same quarter last year. CFO Andy Bryant said that second-quarter revenues would be flat to down sequentially, in line with normal seasonal dips, and that gross margins would stay flat at 59%. In other words, there should be no abnormal slowing down of the PC market, as far as he can see. Otellini added that the company has long known about Compaq's problems, and factored Compaq's inventory backlog into Intel's revenue projections. Other computer makers do not seem to be having the same difficulties, Otellini said. "We've seen no signs of a channel inventory buildup," he said. Analysts hit the Intel executives with questions about Compaq's troubles and about the dire predictions of the death of the PC recently issued by IBM (IBM:NYSE) CEO Louis Gerstner. Otellini brushed those fears aside. "We are still very strong advocates of the PC for the principle computing interface and the principal Internet interface," he said. "Don't worry, be happy," seemed to be the theme of the call. Merrill Lynch analyst Joe Osha asked if the company was planning for a "nuclear winter" in the server market during the second half of the year because of Y2K concerns. No fear, Otellini said. "On the contrary, we are planning for a normal year." Few were willing to buy the bullish line this time. The call was marked by the absence of congratulations from the usually laudatory analysts, a reaction perhaps to the absence of any pleasant surprises. Average selling prices? Within expected range, Intel said, declining to disclose specifics. Unit volumes and product mix? Also within expectations. Otellini did state that it has now regained some of the market share on low-priced PCs that it lost lately to rival Advanced Micro Devices (AMD:NYSE), but he wouldn't say what the share is now or how much was regained. Intel will continue to drive down its costs and keep dropping prices to remain competitive in that low-priced sector, Otellini said. The company found, he said, that it can compete at the lowest end, without driving down profitability. Finally, Intel issued rather vague statements about its troubled Rambus-based chipset, codenamed Camino. That chipset was supposed to come out in the summer and is now scheduled for production late in the third quarter. But Intel chipsets will also support non-Rambus Synchronous DRAM, Otellini said. And he did not outright dismiss the notion that Intel could come out with a higher speed SDRAM chipset that could compete with Rambus, known as PC133, saying only that "we don't need to do it in the next generation."