24/7 Wall St.

Intel Corp. (NASDAQ: INTC) is seeing shares drop some 2% in early trading after JPMorgan trimmed estimates on the chip and processor giant.  The brokerage report showed an under-trend pattern in its channel checks on weaker than expected microprocessor orders.  This also has all the earmarks tech investors won’t like hearing as this notes excess microprocessor inventories AND decelerating demand for PC’s.  Furthermore, it also notes that for the giant to meet its mid-point of guidance that it will have to see strong sales in March.

JPMorgan maintained its Neutral rating on the stock, but it has lowered estimates for both 2008 and 2009.  If JPMorgan is right, and we stress IF, then this has all the earmarks of an earnings warning possibly coming after next week.  Its guidance with last earnings was already weaker than Wall Street wanted to hear, and a second ‘lowering of targets’ probably wouldn’t see the warmest reception from a cold neighborhood.

Goldman Sachs recently took it off the Conviction Buy List, and AmTech also removed it from the Focus List.

The recent guidance out of Best Buy didn’t exactly leave the feeling that this is the best PC market in the world, although H-P didn’t throw out the classic signs that the PC market is heading south.   Despite a 28% drop from highs on Intel, the case for tech staying slower is starting to overshadow the cheap relative valuations.

Jon C. Ogg
February 27, 2008