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Investors to stand by Intel
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June 5, 1998: 5:05 p.m. ET
Analyst says looming FTC antitrust suit won't affect company's shares
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NEW YORK (CNNfn) - The Federal Trade Commission is expected Monday to approve an antitrust suit against Intel Corp.
Some analysts, however, don't believe such action against the chip giant will have any adverse affects on its stock.
The FTC has argued Intel illegally used its monopoly power by arbitrarily cutting off technical information to competitors, preventing those companies from shipping their products on time.
The commission's case is based in part on a lawsuit filed by Intergraph Corp. (INGR). The company claimed Intel used "coercive tactics," including withholding vital information and technical support, to acquire the rights to Intergraph's microprocessor patents at no cost.
Industry watchers don't expect FTC's charges to be nearly as sweeping as the case against Microsoft Corp. filed by the Justice Department and 20 state attorneys general, and analysts expect the market to respond to an Intel suit with a collective shrug.
"The market already knows this is going to happen," said Jeffrey Maxick, a technology analyst at Madison Securities. "There are so many things going wrong for the company right now, and this is just one."
Several analysts in the past week have lowered their estimates for the company, and Intel's stock hit a new 52-week low on Wednesday.
Last week, Intel reported production delays of up to six months for its anticipated Merced chip, which is designed for the lucrative workstation market.
The company also has warned that it expects sluggish sales in the second quarter, due to inventory backlogs in the PC channel and the struggling Asian economy.
Analysts also have rued the fact that Intel has been forced to compete in the sub-$1,000 PC market, which brings in decidedly lower margins than the more powerful chips Intel is known for.
"Between Merced and analysts dropping their estimates, the FTC [lawsuit] is not as big a deal as the others," Maxick said. "When the announcement is made, the stock probably won't go down very much."
Shares of Intel (INTC) closed Friday at 69-13/16, up 1-5/8.
-- by staff writer John Frederick Moore
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