Intel and AMD shares tumble on downgrades

By David Goldman, staff writer


NEW YORK (CNNMoney.com) -- Shares of chipmakers Intel and AMD fell sharply Tuesday after analysts downgraded the stocks, warning that once-robust personal computer sales were quickly deteriorating.

Barclays Capital analyst Tim Luke downgraded shares of AMD to "equal weight" from "overweight" and reduced his target price by a buck to $9, noting that PC shipments have remained "subdued." As a result, he said AMD's outlook may be "aggressive."

Similarly, analysts at Robert W. Baird downgraded Intel's shares to "neutral" from "outperform." The Baird analysts noted a "sharp deterioration" in PC orders over the first week of August after July's shipments came in lower than expected.

Analysts at JPMorgan used perhaps the most forceful language, saying that PC order rates in Taiwan were "falling off a cliff," deteriorating sharply during the last part of July. JPMorgan lowered its full-year earnings-per-share outlook on Intel by 6 cents to $1.95 but kept its rating at "neutral."

Shares of Intel (INTC, Fortune 500) fell 4% to $19.82. AMD's (AMD, Fortune 500) stock dropped 8% to $6.83.

As recently as July, Intel and AMD reported strong second quarters on the back of booming PC sales, with Intel reporting its "best quarter ever." Those reports had raised the hopes of tech companies and investors that consumers and businesses were once again buying computers. But that tide seems to be shifting, and analysts noted that PC manufacturers have begun to scale back their orders from suppliers.

Other companies reliant on PC sales fell as well. Graphics chip maker Nvidia (NVDA) sank 4%, Microsoft (MSFT, Fortune 500) and Apple (AAPL, Fortune 500) fell less than 2%, and Dell (DELL, Fortune 500) fell nearly 4%. Hewlett-Packard (HPQ, Fortune 500), which had its own share of news late last week when its CEO resigned, was a lone exception, with shares flatlining.

Intel and AMD inked a peace treaty in November after years of lawsuits that accused AMD of patent infringement and Intel of abusing its monopoly position. Intel, the world's largest chipmaker, paid its rival $1.25 billion and agreed to abide by "a set of business practice provisions." In return, AMD dropped all three of its pending lawsuits against Intel.

Intel last week settled with the FTC over antitrust charges, in which the chipmaker was accused of refusing to sell chips to some computer manufacturers that also bought chips from AMD. The ruling had little impact on either Intel's or AMD's stock at the time. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 17,804.80 26.65 0.15%
Nasdaq 4,765.38 16.98 0.36%
S&P 500 2,070.65 9.42 0.46%
Treasuries 2.18 -0.03 -1.27%
Data as of 6:27am ET
Company Price Change % Change
Bank of America Corp... 17.62 0.09 0.51%
Apple Inc 111.78 -0.87 -0.77%
General Electric Co 25.62 0.48 1.91%
Intel Corp 36.37 -0.65 -1.76%
Microsoft Corp 47.66 0.14 0.29%
Data as of Dec 19

Sections

New York Magazine reporter Jessica Pressler, who has been caught up in controversy this past week, will not be moving on to a new job at Bloomberg News. More

Investors beware: These 5 global crises are likely to rattle the stock market and world economy. More

Forums in dark corners of the web sell the kinds of hacks that befell Sony. More

Unilever sued Hampton Creek over its egg-free mayonnaise spread Just Mayo. But the company behind Best Foods and Hellman's mayonnaise has now dropped the lawsuit. More

The income of the top 1% jumped significantly in 2012, far outpacing inflation. Not only did this group make a larger share of the country's income, their share of total taxes also jumped from 35% to 38%. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.