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BARGAIN CHIPS, SHRINKING PROFITSARE CHEAP CHIPS DRAGGING down Intel? The company disappointed investors with third-quarter earnings that fell $72 million short of estimates, and its stock fell 5.6%, to 86 11/16, on the news. Intel earned $1.57 billion, up 20% from last year's third quarter, on revenues of $6.2 billion, up 19.7%. Not bad growth, but investors were spooked by a drop in the average selling price of Intel's microprocessors. Pentium prices are under pressure as PC makers push cheaper models at retail. The result: Intel grossed about 16% less per chip, says analyst Ashok Kumar of South Coast Capital. Making matters worse, prices for flash memory, where Intel has a 33% market share, are wilting. That could trim Intel's flash revenues by some $56 million, says analyst Alan Niebel of Semico Research.
EDITED BY KELLEY HOLLAND
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Updated Oct. 16, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.
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