Intel tiptoes to regain market share

Intel Corp. chief executive officer Craig Barrett said he's turned the world's biggest maker of computer chips into "a ballet dancer" after a series of stumbles that crimped sales and profit.

"We've regained our footing," he said in an interview after meeting with analysts in New York Tuesday. "We can always trip again. I hope not."

Barrett said Intel has fixed engineering and design problems that caused delays in getting chips to customers and the cancellation of at least five products this year. He and President Paul Otellini on Tuesday laid out a plan to stem slowing sales growth by creating chips that let personal computers manage televisions, digital video recorders and audio players.

"They're trying to assure us that there are not going to be any more product delays or problems with new launches," said Jessica A. Caie, portfolio manager at New York-based Cohen, Klingenstein & Marks, which oversees $2 billion and owns Intel shares. "Investors are very focused on that, and we are as well."

Shares of Intel, based in Santa Clara, Calif., fell 53 cents to close at $23.48 Tuesday in Nasdaq stock market composite trading. They've fallen 27 percent this year and are the third-worst performer in the Dow Jones industrial average.

Barrett and Otellini, who becomes chief executive in May, need a big hit. Intel's sales growth will slow to 7 percent next year, according to the average of 30 analysts surveyed by Thomson Financial, from an estimated 13 percent this year.

"We had some problems with our last generation microprocessor, and it gave us fits and starts throughout the first half of this year," Barrett said, adding, "99 percent of the delays are behind us."

The remarks may help sustain investor optimism after Intel raised its sales forecast last week for the first time in more than a year and its shares gained 5.3 percent in one day.

To boost sales Otellini is backing away from a maxim Intel obeyed for years: that faster chips spur PC demand. He assigned researcher Justin Rattner to focus on features such as battery life, sharper graphics and wireless connections. Otellini dubbed the effort "platformization."

His model is Centrino, a chipset Intel introduced in March 2003 to create wireless Internet hookups for laptops. Intel got $3.1 billion in sales from Centrino the first year. The chips aren't as fast as desktop models of the Pentium, the main processor that runs PCs. Consumers liked Centrino anyway because they could send e-mail and surf the Internet in coffee shops.