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Dow Drops in Response to Intel's Sharp DeclineAired September 22, 2000 - 2:12 p.m. ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU WATERS, CNN ANCHOR: A serious stock shift on Wall Street today. The market fluctuation follows a warning from the Intel corporation about weak third-quarter revenues.
The Dow Jones industrial index dropped 150 points in the first two minutes of trading. That was followed by sell-off spikes throughout the day before recovering slightly.
CNN's Steve Young joins us now from New York with more about what's going on on Wall Street today -- Steve.
STEVE YOUNG, CNN CORRESPONDENT: Hi, Lou.
It all began about 22 hours ago when Intel issued that warning. It said that third-quarter revenue would be up only three to five percent. Wall Street analysts had thought it would be nine or 10 percent.
That sent a shock into after-hour markets, and before our trading this morning. But Intel, last we looked, was down about 13, and that was better than the 15-point loss it had suffered at the neighbor of the market -- the Nasdaq was down more than 200. Now it, at last glance, was down about 85 or 88.
And there were some winners buried in these losers because, as Intel, the microprocessor company is in trouble, Advanced Micro Devices, another American chip giant, is doing well and, in fact, is believed to be gaining on Intel and Europe. As Dell, the PC maker is doing badly today, Gateway, another American-based PC maker, is doing well, apparently because it has less exposure in Europe.
Analysts, though, were busy downgrading, as they are wont to do, assuming that Intel is a bellwether for other technology stocks; they did, for example, downgrade the so-called capital equipment companies, like applied materials.
Those are the companies that make these giant, million-dollar machines that are used to make chips by Intel and AMD and others. And there are other examples in the PC food chain of stocks that are not doing well today because of this Intel warning.
For example, the companies that make modems for PCs or that make hard drives for your PCs or make the logic chips or the graphics chips that are used for displays in games that you may play on your PC. Those companies are not doing well either.
But one of the winners buried in all that is Texas Instruments because, years ago, it got rid of its memory chip business. It now specializes in what they call digital-signal processing chips -- those are what are in cell phones.
There's been some question about the telecom market in the last couple of months, but its still considered more robust and Intel -- rather, Texas Instruments was up a couple of points today -- Lou, back to you.
WATERS: Can you help me understand how three to five percent revenue growth still translates into a company in trouble?
YOUNG: It shouldn't, indeed. At one point, today, Intel had lost something like $80 billion in market cap. But, you know, what these guys on Wall Street, the money managers, do is, they don't look at the full or the three-quarters full-blast, they look at the one quarter empty.
There was an example in that just the other day with Oracle, that did splendidly in everything except one teeny part of the business, and the stock got creamed.
WATERS: OK, we'll continue to watch.
That's Steve Young up there in New York at our bureau.
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