Intel 2.8GHz Pentium 4 to Ship Early

In an effort to combat weak sales, Intel moves up release of its 2.8GHz P4 and mulls price cuts.

Intel Corp. is pushing up the release of a 2.8GHz Pentium 4 to this summer in hopes of boosting sagging sales of its flagship PC processor, sources close to the company say.

In addition to raising the bar for its fastest chip from 2.53GHz to 2.8GHz, the Santa Clara, Calif., company also is considering additional price cuts this quarter in a bid to reduce its rising supply of unsold Pentium processors, sources say.

Weaker than expected PC sales during the second quarter have left Intel with an oversupply of chips, a troubling situation that pushes up the chipmakers operating costs while it struggles with a decline in overall sales.

Intel first acknowledged disappointing sales last month when it surprised Wall Street analysts by issuing a lower-than-expected earnings forecast for the quarter, a move that spurred a sell-off of stock that sent the companys shares down about 20 percent.

In a further blow, Salomon Smith Barney Tuesday lowered its earnings projections for Intel through the rest of the year and cut its stock target price 30 percent. Salomon Smith Barney analyst Jonathan Joseph said he lowered his expectations due to Intels rising inventory levels and customers increasing preference for cheaper Celeron chips, which yield far less profits than pricier Pentiums.

In a bid to boost the attractiveness of its leading brand, Intel moved up the launch of its 2.8GHz Pentium 4 from the fourth quarter to this summer, sources said. The chip, which will be released in the coming weeks, will initially be offered at $637, with the price of its current speed king, a 2.53GHz chip, falling from $637 to $433.

Intel also will release a 2.66GHz Pentium 4 priced at $562 and a 1.9GHz Celeron costing $138. Prices are based on 1,000-unit quantities.

Intel, which has a policy of not discussing future product releases, will tip its hand about upcoming chip plans when its reports its second-quarter earnings July 16, sources said.

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