SAN FRANCISCO (MarketWatch) - Intel Corp. came under early pressure Wednesday after a prominent broker cut back its earnings estimates for the chipmaker, citing worries of slowing PC sales that is resulting in growing inventory.
In a report to clients, J.P. Morgan analyst Christopher Danley cut his earnings estimate for the current year by more than 5%. He also trimmed his target for 2009.
Shares of Intel (INTC:Intel Corporation
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2:37pm 02/27/2008
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INTC 20.70, +0.01, +0.1%) fell more than 2% in early trading Wednesday, though the stock recovered later in the session as the broader market turned up following comments by Federal Reserve Chairman Ben Bernanke. See full story.
Intel's stock has already given up more than 20% of its value since the first of the year as worries about an economic slowdown have pressured tech stocks following a strong performance in 2007.
In his report, Danley cut his earnings-per-share target for 2008 to $1.36 from $1.44. The consensus estimate on Wall Street for the year is $1.41, according to Factset Research. For 2009, the analyst trimmed his EPS target to $1.50 from $1.56.
"Our checks indicate that Intel's [first quarter] is trending below plan due to weaker than expected orders for microprocessors (68% of 4Q07 revenue)," Danley wrote in his report. "We believe the lower-than-expected revenue is being driven by excess microprocessor inventory in the channel and decelerating PC demand."
The analyst added that "additional downside exists" and said he may revisit his neutral rating on the shares "after what we believe could be the first major round of estimate reductions."
The report may have put pressure on other stocks in the PC sector. Dell (DELL:dell inc com
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2:37pm 02/27/2008
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DELL 20.63, +0.15, +0.7%) , which reports results on Thursday after the bell, was down 1% in early trading. Hewlett-Packard (HPQ:Hewlett-Packard Co.
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2:32pm 02/27/2008
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HPQ 48.73, -0.47, -1.0%) , which reported strong PC sales for its quarter ended January 31 last week, was down 0.7% in early trading.
Intel rival Advanced Micro Devices (AMD:Advanced Micro Devices, Inc
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Last: 7.25+0.12+1.68%
2:32pm 02/27/2008
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AMD 7.25, +0.12, +1.7%) was down 0.7% in early trading.
Dan Gallagher is MarketWatch's technology editor, based in San Francisco.
Maybe they cut MB prices ??