Currency, Oil Could Pose More Problems for Intel

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Thursday September 21 9:23 PM ET Currency, Oil Could Pose More Problems for Intel

PALO ALTO, Calif. (Reuters) - The weak European currency is probably not to blame for Intel Corp.'s (NasdaqNM:INTC - news) current troubles in Europe, but it could make a difficult business climate worse in coming quarters, analysts said on Thursday.

Like many global companies already feeling the effect of the weak euro and high oil prices, Intel could see demand soften further if these trends persist and further squeeze consumer spending.

``There are some underlying macroeconomic issues in Europe,'' said Wit SoundView analyst Mark Specker. ``The euro falls in comparison to the dollar, and Europeans do notice the difference. For them the world has gotten a lot more expensive.''

Even before Intel said it was expecting only paltry sales growth because of weakness in demand in Europe, a broad group of European technology and telecom company stocks had tumbled amid fears the double whammy of cheap currency and expensive oil could derail corporate profit growth.

``It's definitely a reason for concern,'' said J.P. Morgan Securities analyst Daniel Kunstler.

``If you extrapolate what is going on now through next quarter, when you see the heating season start, you'll probably see a lot of resources diverted to oil away from other things. If it costs $100 in Europe to fill up your car, that PC you were going to buy is not going to happen. Or, if you are a trucking company with huge fuel expenses, you will eventually have to cut back spending in other areas.''

http://dailynews.yahoo.com/h/nm/20000921/tc/intel_economy_dc_1.html

-- Martin Thompson (mthom1927@aol.com), September 21, 2000


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