Salomon Cuts Intel Estimates

Analyst Jonathan Joseph says the chipmaker's flash and communications component business may be weaker than he expected

Salomon Smith Barney cut its earnings per share estimates on Intel (INTC ). Late Friday, Apr. 6, Salomon put its estimates under review.

Analyst Jonathan Joseph says that channel checks suggest Intel's flash and communications component business may be coming in weaker than he expected in recent weeks. He says it will likely run at a loss through most of 2001. According to Joseph, the net impact could be that flash and communication component sales (which account for nearly 20% of Intel's total sales), could generate slightly lower sales and lower gross margins, which have already been weakened by low utilization rates, falling processor prices, and higher costs related to the P4 product ramp.

The analyst cut his $0.60 2001 EPS estimate to $0.55 and his $0.80 2002 forecast to $0.72. He maintains his outperform rating on the shares. As for Intel's share price, Joseph sees a downside risk of $20 -- or below.

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