Intel Takes a Dive

NEW YORK CITY: Intel's prediction of weaker-than-expected second quarter earnings sent the stock plunging in early trading Friday, dragging many other tech-stocks with it. Citing surprisingly weak demand for its microprocessor chips, Intel suffered a 14.5 percent drop in morning trading on the Nasdaq exchange. By the end of trading, the stock made up more than half its loss, finishing down $12.27 at $151.50 "Investors have a tendency to oversell and overbuy stocks when there is especially good or bad news," said Charles Boucher, an analyst at New York-based UBS Securities. "On a negative announcement from a company that is as widely owned as Intel, you normally get an excessive degree of selling. Investors then evaluated the situation and took it as a buying opportunity. You had people buying the stock when it hit the bottom this morning and there has been consistent buying to bring it back up." The problem for Intel, Boucher notes, is that the company's new products have essentially eclipsed demand for the old ones: "Intel is a victim of its own success in rolling out new products and introducing new technology. They've done that so well and so rapidly, they've made obsolete their existing Pentium processors."