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Intel Cuts Prices As Analyst Downgrades Earnings Forecast

May 27, 2002 (08:05 PM EDT)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=6502262


Intel has slashed prices on its chips for desktops and laptops by more than 50 percent in some cases as it tries to spur demand for its high-end products among PC makers and, ultimately, consumers and businesses. For laptops, the company cut the price of its 1.7 GHz mobile Pentium 4 processor by 53%, from $508 to $241. On the desktop side, it dropped the price of its 2.26 GHz Pentium 4 chip by 43%, from $423 to $241. The company made similarly aggressive cuts throughout much of its desktop and laptop chip lines.

In a research report released Tuesday, Merrill Lynch analyst Joe Osha calls the cuts a "positive" move that could boost sales for the company. Nonetheless, Osha reduced his full-year earnings estimate for the company from 77 cents to 75 cents. Osha also reduced his revenue estimate for the company's second quarter ending May 31 from $6.96 billion to $6.76 billion, noting that sales for the period have been soft. Merrill Lynch continues to rate Intel's stock, which in trading today fell $0.31 to $28.35, as a strong buy. Intel says it plans to release a mid-year business update on June 6.

In some slightly positive news for the chip industry, an industry group predicted that overall sales would increase this year after falling 32% last year. This year, chip sales will increase 2.3% to $142 billion, according to World Semiconductor Trade Statistics.