Don't panic on Intel, say Euro tech firms, analysts

LONDON: European technology shares were hammered on

Friday after Intel blamed weak European demand for its microprocessors and cut

its third quarter revenue forecast, but companies and analysts see no slowdown

in PC sales. "We don't see a reversal in PC sales", said semiconductor

analyst Nicolas Gaudois at Morgan Stanley Dean Witter.

Most European semiconductor companies are not exposed to PC sales, with

Philips Semiconductors and ST Microelectronics focusing on chips for consumer

products such as cars, mobile phones and CD-players, he said. And while Intel's

profits may be very sensitive to a few slow summer weeks, this would hardly

impact results at Europe's largest computer memory chip (DRAM) maker, Infineon.

As a mark of its confidence Morgan Stanley raised its 2000 earnings forecast

for Infineon by 4 per cent on Thursday.

Siemens, the parent company of the German DRAM maker, which lost 6.3 per cent

to 148.70 euros in early trading, said on Friday its unit was in

"excellent" condition.

ST Microelectronics, the French-Italian semiconductor maker which fell 5.7

per cent to 57.50 euros, was not immediately available to comment, but analysts

say only 20 per cent of its business is related to the PC industry for which it

makes hard disk drive semiconductors.

Philips Semiconductors, a unit of Netherlands-based Philips Electronics whose

shares lost 7 per cent to 48 euros, said it was not exposed to PC sales.

"We're not in memory chips, so whatever Intel is saying, has little

impact on us," a spokeswoman said.

IBM Europe, a unit of the world's largest computer company would not comment

ahead of its third quarter results announcement next month.

Compaq Europe and Fujitsu Siemens in Germany were not immediately available

to comment.

Dell Computer Corp., the world's second largest PC maker, was off more than

10 per cent in the US after an hour of trading, or $4-1/4 at $33-11/16. This was

despite earlier comments by vice chairman Kevin Rollins that there was recovery

in sight in European corporate demand for its computers.

Nordic mobile



Intel's announcement, saying it sees third quarter sales rising only between 3-5
per cent, also dragged down tech companies which are entirely unrelated to the

PC industry.

Nordic mobile phone companies Nokia and Ericsson and French telecoms

infrastructure to handsets maker Alcatel, all shed between 4 and 5 per cent of

their stock market value.

Investment bank Dresdner Kleinwort Benson on Thursday warned that handset

suppliers were heading for modest 20 per cent year-on-year revenue growth in the

fourth quarter, after having enjoyed growth in excess of 30 per cent.

But Philips Semiconductors, one of the major suppliers to the mobile phone

industry, said there were no signs of weakening.

"Demand continues to be strong," the spokeswoman said.

(C) Reuters Limited 2000.