With everything going so terribly well in the technology sector, the market is undergoing an acute anxiety crisis, and when a bellwether company like Intel Corp reports, the patient’s vital signs have to be examined in painstaking detail, and any slight twinge, momentary tick or sunshine sneeze is taken as incipient double pneumonia at the very least. So it was that late on Tuesday, Intel announced superb figures, the market took a good hard look at them and decided they were terrible. Intel’s earnings were just slightly below analysts’ super-gung-ho expectations for its fourth quarter, but the company fed their hungry angst by pointing to slower-than-expected growth in personal computer sales as well as an unexpected write-down in inventory related to falling component prices. The pessimists hugged themselves with delight and gave each other I told you so grins when Intel predicted that turnover this quarter would be flat and announced that it was forced to write about $50m to $70m of the value of of its inventory in the fourth quarter because of a big drop in prices for the most widely-used kind of memory chips – 4M-bit dynamics. People in the industry doubt that a major slowdown is occurring in the personal computer business, but they do agree that a little moderation in the chip industry is due, with turnover growing at only 26% this year compared with 44% in 1995. Intel’s sales in North America were flat in the fourth quarter while sales grew in Europe, Japan and the rest of Asia. Fourth quarter turnover rose a whopping 42% to $4,580m, on which it did $867m net, more than double last year’s figure.Turnover for the full year soared 41% to $16,200m.The company said the 75MHz Pentium was its unit volume leader in the fourth quarter, but the market is quickly shifting to 100MHz. Intel said its capital expenditures will rise to about $4,100m in 1996 from $3,600m in 1995 and it expects depreciation in 1996 to be about $1,900m, up from $1,400m in 1995. Its own internal book-to-bill ratio exceeded 1.0 in the fourth quarter. Shipments of motherboards increased at about the same rate as shipments of Pentium processors compared with the third quarter. Japan and the Asia-Pacific regions were its strongest growth areas in the quarter. The company’s gross margin slipped to 48% in the fourth quarter, compared with 52% in the third quarter.Intel’s shares plunged $5, or 9%, to $50.75 on volume of 12m shares within minutes of opening. Average daily volume is for the company is 9.3m.
