Publish date:

Intel Downgrade Advances AMD's Cause

The No. 2 chipmaker's stock was up 5% after Morgan Stanley's Mark Edelstone downgraded Intel.

The

Nasdaq

opened to the downside after a leading chip analyst downgraded the sector's leading player.

Morgan Stanley Dean Witter

semiconductor analyst Mark Edelstone cut

Intel

(INTC) - Get Intel Corporation (INTC) Report

to outperform from strong buy, saying delays in the

rollout of the chipmaker's 0.18-micron process technology will pressure revenue and profit growth.

In downgrading the stock Edelstone joined a herd of

bears who have been growling about Intel's poor product mix: Consumers have been buying more low-cost, low-margin Celerons than costlier, more profitable Pentium III chips.

Edelstone told

TheStreet.com

that Intel needs the 0.18-micron technology as soon as possible to increase performance in the Pentium III and make it more attractive. "We think the delay could lead to an adverse product mix in the second half of the year and it could reduce the upside potential," he said. "They need to keep feeding the engine."

Intel can't afford delays now, he says, since competitor

Advanced Micro Devices

(AMD) - Get Advanced Micro Devices, Inc. Report

is readying its high-performance

K7 chip for market. "The delay gives AMD a bigger window of opportunity," Edelstone says. Intel was down 3 3/16, or 5.5%, at 54 3/4, and AMD was up 15/16, or 5.1%, at 19 15/16.

TheStreet Recommends

More Bad News at Iomega

Zip-drive maker

Iomega

(IOM)

set a $45 million second-quarter charge to cut 450 jobs. The company said poor sales of its Zip and Jaz drives will result in a second-quarter loss of 5 cents to 10 cents a share, excluding the restructuring charge. That compares to a year-ago loss of 13 cents a share, excluding charges. Iomega was down 1/2, or 11.4%, at 3 7/8.

TSC's

Herb Greenberg

discussed Iomega's problems this morning.

New Prez at priceline.com

priceline.com

(PCLN)

jumped 7% on news that the head of

AT&T's

(T) - Get AT&T Inc. Report

consumer markets division joined the name-your-price e-commerce Web site as president and chief operating officer. At priceline, Daniel H. Schulman will be responsible for operations, technology, marketing and product development and will report to chairman and CEO Richard Braddock. priceline.com was up 4, or 4.5%, at 92 13/16.

Rambus Rollercoaster

Shares of memory-chip designer

Rambus

(RMBS) - Get Rambus Inc. Report

were giving back some of yesterday's 9-point gain, which came on news that the testing equipment unit of

Schlumberger

(SLB) - Get Schlumberger NV Report

developed a testing technology for Rambus-based memory chips that would improve a memory-maker's ability to produce the chips in volume and bring them to market faster. Rambus was one of last year's hottest stocks on the expectation it would take a large share of the memory-chip market, but it has been volatile this year. Rambus was down 2 15/16, or 3%, at 92 5/8.