Analysis: Intel in stock market balancing act

From one day to the next, Wall Street can't seem to decide whether there is a slump in the PC market, and if so, which stocks will be affected by it.

Balancing in the centre of that seesaw -- perhaps more than any other stock -- is Intel (Nasdaq:INTC), whose microprocessors are used in most PCs.

The stock's ups and downs have depended at least partly on whether the predominant perception of the moment was that Intel could do no wrong or that Intel would be hurt by a slowdown in the PC business, according to Michael Geran, an analyst at Donaldson, Lufkin & Jenrette Securities in Jersey City, New Jersey.

Rick Whittington, a semiconductor analyst at Soundview Financial Group in Stamford, Connecticut, seems to have a hold on Intel. If PC growth is less than 10% this year, Intel will have a down year, Whittington predicts. He says he doesn't see a significant rise in Intel stock unless the PC market shows a growth of at least 20% this year.

Whittington says the company has little earnings momentum because it is in the midst of a transition from one microprocessor generation, the Pentium, to the next, the Pentium Pro.

But Drew Peck, an analyst at Cowen in Boston, has high hopes for Intel next year. He says that is when the company will see strong demand from corporate America for its Pentium Pro -- driven by a stable version of Microsoft's Windows NT 4.0 -- and from the consumer market for its MMX processor, due at the end of the year. "1997 will be one hell of a product cycle for microprocessors," Peck says.

Investors could buy the stock this year when its price is soft and then hold on for an upward swing in 1997, he says.

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