Mystery illness hits Intel shares

Mystery illness hits Intel shares
No indication of downturn but nearly $20bn wiped off Intel share price and billions wiped off stock markets; competitors also expecting significant losses. What’s going on? asks David Manners Times change. Twenty-five years ago Intel was a techie start-up. Now the FT can carry the front page headline – as it did last Friday – ‘World stock markets fall as Intel warns of lower profits’. The Dow Jones fell nearly 100 points; the Nasdaq nearly 50; the FTSE nearly 40. Intel, as an analyst remarked last week is the computer industry. The computer industry these days sells 90 million units a year costing $1,400 each. $130bn industries growing at 12-15 per cent a year are important to the world economy. But the computer industry is especially important because it reflects the rate at which the wider economy is either expanding, or seeking to modernise, or is putting money into consumers’ pockets. On the face of it, a drop in orders to Intel would seem to presage a drop in world demand for computers, but does it? “There’s no indication that the market has gone soft. No signs of a downward movement,” Intel’s European General Manager, Steve Poole, told EW. Asked if the drop was in Asian sales, Poole, replied: “We took the big hit in Asia in Q4. This downturn is in the US and Europe. We’re talking to OEMs about the reasons for it, but at the moment we just don’t know.” Some analysts blame the rising market share of cheap, sub-$1,000 PCs, but Intel says that its average selling price has not declined significantly. If the PC makers were buying more micros from the lower end of the range to make cheap PCs, there would have been a decline in Intel’s sale price, but there wasn’t. So why the drop in orders? Well it could be that rivals AMD, National/Cyrix and IDT are supplying more of the low-end micros for the cheap PCs. But IDT, on its own admission, is still in low volume (tens of thousands a month) production, while National/ Cyrix is having its parts made by IBM – and not in significantly high volumes. The only major potential competitor, AMD, says it had made a loss in Q497 and would make a ‘significantly’ bigger loss in Q198. It also said it expected significantly lower revenues in Q198 than Q497. That’s hardly the sort of news one would expect from a company which is impacting on Intel’s market share. Asked if it was Intel’s perception that rival micro makers are muscling in on the low-end PC market, Poole responded: “The first thing we looked at is ‘Are we losing huge amounts of market share in the sub-$1,000 category’ – but it seems we’re not.” So it’s a mystery – but a mystery which can wipe nearly $20bn off Intel’s share price in one day and untold billions off the values of the world’s stock markets. Chips for cheap PCsIntel has announced the first product in a series of processors aimed at low cost PCs, writes Richard Ball . Celeron, previously codenamed Covington, is a new brand of processors based on the Pentium II/Deschutes core, but with fewer features. “The first Celeron is running at 266MHz. It will not have second level cache,” said Pier Mirjolet, Intel Europe’s marketing programmes manager. The processor is aimed at the sub-$1,000 PC market, and will replace the Pentium with MMX from April. “We saw that increasing multimedia and floating point performance was important,” said Mirjolet. In the low cost market it is the floating point, rather than integer performance, that is important, he said. Without level two cache, Celeron could even be slower than a Pentium on integer applications, such as word processing. But games and Web browsing will be faster. Later this year, Intel will announce the second Celeron processor, codenamed Mendocino (see diagram). This will re-introduce 256kbyte of cache, but integrated on-chip, and running at the full processor speed. The performance boost will be significant. For high end machines, such as multi-processor servers, the Deschutes processor will move to a new package, called Slot 2. This will have a full speed level two cache, and will run at up to 450MHz this year.


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