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Intel Puts the Spin on Its Wheel of Fortune

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NEW YORK: Well, they canít all be bulls. But FORTUNE writer Nelson Schwartz says that despite Intel's after-the-bell report Tuesday that its second-quarter earnings declined 29 percent from last year to 66 cents per share, the chip makerís stock shouldnít take too much of a hit -Ė because on Wall Street, as in Washington, the spinís the thing. "Although the published expectation was higher, at 68 cents, the way Intel announced it was much more important than the actual number," says Schwartz. "They predicted a better performance for the next quarter," and thatís what investors will heed. Indeed, listen to Intel chief executive Craig Barrett: "Despite a difficult environment for the computing industry, Intel has made significant strides toward increased productivity.... We have cut costs, extended our product line, and are ahead of schedule in using new manufacturing processes. As a result, we have increased Intelís competitiveness substantially."

Sounds great -Ė but can we believe it? In contrast with pronouncements from Washington, the answer is probably. "Intelís a bellwether for the PC industry, as well as being on the front lines of the Asian crisis, so everyone listens very carefully," says Schwartz. "If there were bad news coming, they would be preparing investors for it. Otherwise, next time around, theyíd get hammered." How often fear and honesty go hand in hand.

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