Intel Is Optimistic, but Investors Bolt

Fearing the chipmaker will be affected by economic woes, Wall Street pays little heed to signs of Intel's health

A word of caution can be very risky these days. In its quarterly update on Jan. 15, Intel reported that demand for PCs and other gadgets made with its chips remained robust despite the economy's wobbles. But CEO Paul Otellini, despite declaring that "We remain optimistic about 2008," was reasonable enough to allow that the drumbeat of worrisome economic news is hard to ignore entirely. Investors issued a speedy verdict, slicing 14% off Intel's (INTC) already battered stock price soon after the fourth-quarter report. The shares tumbled an additional 12% in early trading the following day.

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