Lehman's Niles Lowers Earnings Estimates on Intel, AMD

The analyst throws water on hopes that a PC bottoming is upon us.
By Dan Bernstein ,

Lehman Brothers' analyst Dan Niles cut his earnings estimates for Intel (INTC) - Get Report and Advanced Micro Devices (AMD) - Get Report, throwing more water on hopes that weak PC demand may be bottoming.

In a note this morning, Niles said he is making the cuts "based on a continuing deterioration in demand for PCs, a more brutal processor pricing environment and a steeper fall off in flash pricing."

Niles cut Intel's 2001 earnings estimate to 51 cents a share from 55 cents, and lowered 2002 estimates by three cents to 67 cents a share. The analyst lowered AMD's 2001 earnings to $1.20 a share from $1.25, and cut next year's estimate to $1.40 a share from $1.45 a share.

Intel was up 33 cents, or 1.2%, to $27 in midmorning trading. AMD, meanwhile, fell 77 cents, or 3.1%, to $24.22.

The Lehman analyst said that

Microsoft's

(MSFT) - Get Report

new operating platform Windows XP will hurt high-end PC demand in the third quarter and that currency declines in Europe and Asia will crimp demand.

"We remain negative on PCs and semis and believe there is still downside risk to estimates and stock prices," Niles wrote. Several PC makers also had their estimates revised lower this morning by

Salomon Smith Barney

analyst Richard Gardner, and a handful of chip-makers had their

estimates cut by

Goldman Sachs

analyst Nathaniel Cohn.

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