Analyst Downgrades Intel

Posted by Kris | Saturday, January 05, 2008 | | 0 comments »

It has been a highly turbulence year for Intel's stock price in year 2007. Intel started 2008 badly as the stock fell in 2 consecutive trading day. On the time of writing, the stock price stands at USD22.90, a -7.13% drop from Thursday after an downgrade article surfaced.

Let us see whether a logo change from a "dropping" e to an elevated "e" can really change her fortunes since the internet bubble burst in 2000. (The new management team lead by Paul Otellini must be a new believer in fengshui to come out with this new marketing campaign. The "dropping" e intel logo has always been there since the founding of the company)

NEW YORK (AP) -- Citing a dip in chip orders from computer manufacturers during the fourth quarter and a high existing inventory, a JPMorgan analyst downgraded Intel Corp. to "Neutral" from "Overweight" on Friday.

"We are concerned the slowdown in order rates and high inventory in the channel could result in downside to estimates in the first half of 2008," analyst Christopher Danely said in a client note.

In April, Danely upgraded shares to "Overweight," believing the PC market would grow and help Intel's estimates. Growth was good for the past two quarters, but now, Danely said, in the tail end of the fourth quarter, a slide in orders and a large amount of volume already in supply channels could harm 2008 forecasts.

Much of the decline could be coming from Europe, he said, where computer maker Acer Inc., among others, recently lowered estimates due to fewer orders. Europe fueled 23 percent of PC demand in the third quarter of 2007.

"Our checks indicate Intel experienced a late-quarter slowdown in order rates during the fourth quarter of 2007 from the PC end market which negated the upside we believed Intel experienced earlier in the quarter," he said.

As a result, Danely lowered estimates, and now expects 2007 profit of $1.23 per share on sales of $38.5 billion, compared with a previous estimate of $1.24 per share profit on revenue of $38.6 billion.

In 2008, he now forecasts profit of $1.66 per share on revenue of $42.6 billion, compared with a prior call for profit of $1.68 per share on sales of $43.4 billion.

The stock closed Thursday at $24.67.