Intel Corp shares dropped as much as 6.8% on Friday after investment bank Merrill Lynch cut its rating on the chipmaker. The stock rebounded somewhat late in the session to close at $76.1875, down $3.25 for the day. The sell-off began when Merrill analyst Joe Osha lowered his immediate term rating from buy to accumulate. Osha, who left his long-term buy rating intact, cited mounting challenges to the company over the next 12 months.
In a research note, Osha listed several concerns about Intel, including the company’s memory roadmap, next year’s IA-64 launch, and competitive pressure from Advanced Micro Devices Inc. Earlier last week, AMD reaffirmed its challenge to Intel’s leadership in the high-performance desktop processor market and previewed a strong fourth quarter in which it will produce about five million chips.
Merrill revised its average pricing assumption for Pentium III desktop chips during 2000 downward to $233 from $255, which in turn led the bank to reduce its revenue forecast for the year from $34bn to $32.6bn. The bank’s earnings expectations for Intel have been lowered to $2.55 per share from $2.69 and its share price objective was dropped from $100 to $90.
