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Intel and AMD Both Downgraded by Bank of America

No hope for upsides before second half 2008

January 2, 2008 - Shares of Intel and AMD fell after both have been downgraded by Bank of America. Any upsides will have to come from stronger PC demand in the second half of 2008. However, according to the brokerage, it is too early for bottom fishing AMD stocks.

Bank of America Securities has downgraded Intel to Neutral from Buy. According to analyst Sumit Dhanda, former predictions were based on sales growth, margin improvement and an attractive share valuation. Even though he stated that Intel's competitive positioning has never looked better and the company will likely continue to be succesful in its defense against smaller rival AMD, upsides will have to come from stronger PC demand in the second half of 2008.

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Dhanda has also downgraded AMD to Sell from Neutral. The analyst does not recommend anyone investing in AMD right now. Irrespective of whether AMD will be able to deliver on its promise to ramp the much-delayed Barcelona will do very little to stem the share losses AMD will likely witness in servers and desktops.

Apart from Intel and AMD, six other chip companies were downgraded: LSI and National Semiconductor (from Neutral to Sell), Texas Instruments, Analog Devices, Power Integrations, and Semtech (from Buy to Neutral).

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