Intel shares slip as analysts trim outlook

NEW YORK: Shares of top chipmaker Intel Corp. on Monday fell more than 5 per

cent after two Wall Street analysts said price wars in the semiconductor and

personal computer sectors have dented Intel's average selling price.

Intel's shares were down $1.12 at $30.56 shortly after midday, after bouncing

back slightly from a session low of $30.08. Volume exceeded 30 million shares.

Intel, the world's No. 1 chipmaker, derives 80 per cent of its revenues from

supplying chips to computer makers and has been hit hard by the global slowdown.

In the past three quarters, Intel has had to warn of lower sales as demand for

PCs slowed. Intel has had to remain alert as it slugs its out with chief rival

Advanced Micro Devices Inc., even as it watches the top two PC makers, Compaq

Computer Corp. and Dell Computer Corp. wage their own price war.

Salomon Smith Barney analyst Jon Joseph warned on Monday that hopes for a

meaningful back-to-school selling season for personal computers are

"rapidly fading," and cut his forecast for Intel's third-quarter

earnings to 8 cents a share from 11 cents. "Several channel inputs suggest

Intel's average processor contract price may be running slightly lower than we

anticipated, largely due to a product mix favoring lower priced

processors," Joseph said in a note to clients.

Joseph also lowered his forecast for Intel's 2001 per-share profits to 47

cents from 54 cents, and lowered his view for 2002 to 70 cents from 75 cents.

Analysts on average have forecast third-quarter per share profits in a range of

8 cents to 15 cents, 2001 profits between 46 cents and 60 cents and 2002

earnings at 50 cents to 95 cents, according to Thomson Financial/First Call.

On Monday, Lehman Bros. analyst Dan Niles also lowered his estimates for

Intel's average selling price, or ASP, and its unit shipments. "Though we

believe (aggressive pricing) will enable Intel to gain back market share, we

believe that ASPs and margins will be under more pressure than originally

anticipated," Niles said in a note to clients.

"For those who thought the price war was already aggressive, you haven't

seen anything yet," he added. On Friday, Intel Chief Executive Craig

Barrett said he expects demand to rebound in the computer industry, now that an

inventory build-up had ended and new technologies offer a fresh impetus to

growth.

Barrett, speaking in India, said he could not say when robust demand would

return, but added that Intel was investing billions of dollars in anticipation

of a recovery linked to the spread of the Internet. Shares of other chipmakers

also slipped on Monday. AMD shares fell to $17.96, off $1.30 or about seven per

cent, while STMicroelectronics NV slipped 73 cents, or two per cent, to $32.95,

and Texas Instruments Inc. dipped 55 cents to $36.95.

(C) Reuters Limited 2001.