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SAN FRANCISCO -- Here's a sure sign the millennium is nigh and hell just might freeze over: The Street is beginning to doubt the steadfast assurances from


(INTC) - Get Intel Corporation Report

CEO Craig Barrett that all is well. Instead, it's putting faith in forecasts from Jerry Sanders, the CEO of Intel's pesky rival,

Advanced Micro Devices

(AMD) - Get Advanced Micro Devices Inc. Report


On Friday, Joe Osha, an analyst at

Merrill Lynch

and one of Intel's most stubborn bulls,

downgraded the chip titan to near-term accumulate from buy and lowered his 12-month price target on the stock to 90 from 100. He also cut his fiscal 2000 earnings estimate to $2.55 a share from $2.69. The news sent Intel shares as low as 74 3/16, down 6.6% from their close of 79 7/16 Thursday. The stock closed at 76 5/16.

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Osha, whose firm has no underwriting relationship with Intel or AMD, said the Athlon chip from AMD would pose a bigger threat to Intel than he had previously thought. He also cited Intel's

foundering attempts to force the industry to adopt revolutionary memory technology from


(RMBS) - Get Rambus Inc. Report

, a development that would hurt Intel's ability to sell its high-performance Coppermine chips.

Osha took over Merrill's Intel coverage from Thomas Kurlak, a leading chip analyst and a longtime bear who maintained a neutral rating on Intel through most of 1998, even as the stock zoomed upward. In December, Kurlak finally caved in, upgrading Intel to accumulate. He left early this year to join a hedge fund. Until Friday, Osha has been uniformly bullish on Intel.

It wasn't that Osha was shining light on new concerns, since other analysts expressed similar thoughts in recent months. But the sight of a relentless bull downgrading a stock as widely held and beloved as Intel gives the market pause. It says the bearish case is gaining credibility. And if Intel investors lose confidence in the company that has long been Silicon Valley's bedrock, Friday's declines may just be the start.

The concerns about competition from Athlon had been mentioned in Osha's own reports, even when he

upgraded Intel this summer. But the worries were always buried deep in the reports. On Thursday, fears became more real when AMD's Sanders told analysts that not only was Athlon coming out of the factories, but also that the company would be able to sell 5 million chips this quarter and possibly break even, bettering even its own expectations.

AMD also announced that it will begin promoting the Athlon in TV commercials starting on Sunday. A competitive Athlon means PC chip prices will likely drop, which puts serious pressure on Intel's margins. AMD's stock finished down 5.75% Friday, in the wake of an exuberant 22% rise Thursday after Sanders' announcement.

The problem for Intel is that an Athlon chip sells for hundreds of dollars, but AMD has long tried to survive on less than $100 per chip. So even if Intel goes on the offensive by dropping its prices, it would have to drop them way, way down to hurt AMD. And that kind of price drop would annoy Intel's profit-addicted investors more.

Other analysts -- like

Robertson Stephens'

Dan Niles, who has long been less bullish on Intel -- say AMD is but one problem facing Intel. Niles downgraded Intel to attractive from buy back in April, and while most of his colleagues were upgrading the stock this summer, Niles instead upgraded AMD. Robertson Stephens has no underwriting relationship with Intel or AMD.


First Call/Thomson Financial

consensus calls for Intel to earn 63 cents a share this quarter vs. 59 cents a year ago. Niles says that isn't exactly high growth. Consider, he says, that this was during a year in which one competitor,

National Semiconductor


, exited the market midyear, and the other, AMD, failed to produce large quantities of its pre-Athlon chips.

What will happen next year, asks Niles, when Intel has to compete against large volumes of chips from AMD and the Taiwanese-based

Via Technologies

, which bought National Semi's microprocessor business? Niles says he is convinced that AMD will be selling high-end computers to



within the next few months and will start stealing market share from Intel in the corporate computer market within six months.

Intel long had a story investors could depend on. The undisputed semiconductor leader sold more chips than anyone else in the world. What's more, those chips generated cushy profits. But as the company diversifies into communications and the PC market becomes less profitable, there are too many uncertain variables in Intel's future, says


Dan Scovel, another Intel bear. Fahnestock has no underwriting relationship with Intel or AMD.

Add up the risks from Athlon, Rambus and Intel's

foray into the Internet industry, and Intel's prospects for revenue and earnings growth start to dim. "Most people play technology inherently as a growth space," Scovel says. "Intel can remain a healthy company with a steady earnings stream. But what

analysts are fighting about is its ability to expand."

Until now, investors have been more than willing to ignore such bearish warnings. Longtime Intel bear Ken Pearlman of

CIBC World Markets

caved in to this sentiment Oct. 29 by upgrading the stock to buy from hold after Intel wowed analysts on a conference call without ever discussing future profits. But Pearlman admitted that his upgrade was made because the stock was likely to rise, and also because he was under enormous pressure from his sales team to make it. It did not result from any evidence of improved earnings growth in the future, he says. CIBC has no underwriting relationship with Intel or AMD.

Niles says his sales team hassles him "all the time" about his bearish rating on Intel. But investors won't ignore the fundamentals forever, he says. "Intel has underperformed the


this entire year," he says. Intel's up 27% compared to the Nasdaq's 47% rally. "If you are a fund manager, that pulls down your funds. And that's how you lose your job."