It doesn't take much to make share prices 'plunge into freefall' or 'drop like a stone' or fit some other financial cliche which usually means no more than the fact that investors have panicked.
Investors are after a fast buck and when a company hits a bumpy patch they disappear off the back of the bandwagon faster than you can say 'only the paranoid survive'.
Intel's 'investors' did just this last week. They offloaded shares faster than Titanic's passengers made for the lifeboats when it said orders were falling and earnings had begun to slip below expectations.
My first thought was that Intel, or anyone else for that matter, is better off without such fair-weather friends. I've always found it a bit of a misnomer to call them investors. Investment is a long-term relationship - not a quickie in the toilet and a 'thanks for the fast bucks, good luck when it gets tough.'
But it comes as no surprise that they jumped into the lifeboats. After all, in London the FTSE 100 leading share index dropped 80 points immediately after the market opened. Within minutes, z15 billion had been wiped off the UK's largest companies. Similar panics hit Tokyo, Hong Kong and Seoul.
And you're not a smart alec to say this result is unsurprising. Some analysts have been predicting slower growth for Intel since last year and it looks as if the mighty IT industry is heading for its second year of slow declining growth. IDC led the charge last year, predicting that IT spending in 1997 would only increase by 12.3 per cent, from the 1996 figure of 14.1 per cent. It also predicted a decline this year.
Most authorities agree that worldwide PC spending will grow by approximately 15 per cent to $182.5 billion. This is down from the 1997 20 per cent increase and half the growth of both 1994 and 1995.
In July 1997, when second financial quarter results were poor, Intel blamed extra-high expectations set by the first quarter and weak demand in the consumer sectors. But it followed that by saying business demand in Europe remained strong.
There are subtleties hidden within this argument. Moore's Law for example. Intel only has itself to blame for leaving itself and the international channel stuck with huge inventories of vanilla Pentium chips as users waltz straight past Pentium technology to dance with the latest chip flavour - MMX processors.
Intel realised this and predicted a flat 1997 third quarter, but hoped to be back into strong growth by now. Intel masochistically fashions its own rod for its back - predicting stronger growth every new quarter. But those days are receding and the internet might just be to blame. I have been cynical about the NetPC and such devices superseding the PC. But maybe I was wrong all along.
Intel may be forced to adopt Microsoft-like ability in executing a volte-face of industry-stopping proportions by entering the internet appliance business.
So, as Intel's gross margins drop to 53 per cent and long-term gross margins move toward 50 per cent, it cannot blame present woes on the Far Eastern economic turmoil - not even economic witch doctors agree with that. If its slowdown was due to factors other than the Asian crisis, Intel's situation could be dangerous. In a period where it should be poised to take great growth opportunities, it may be handing the baton to its rivals.
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