Intel, Chipmakers Slip On Morgan Stanley Downgrade

SAN FRANCISCO (AP) — Some semiconductor stocks finished lower Tuesday after a Morgan Stanley analyst downgraded the sector and individual stocks including Intel Corp. on a prediction that a boom in their share prices is in its "final innings."

The Philadelphia Semiconductor Sector index fell 3.89, or 1.3 percent, to close at 293.48.

Morgan Stanley analyst Mark Lipacis downgraded the sector from "Attractive" to "Cautious," saying the semiconductor index is up nearly 75 percent from its bottom but has started to underperform.

"We expect continued underperformance and are sellers on rallies," he wrote.

Lipacis knocked down ratings of stocks including microprocessor maker Intel, whose shares fell 51 cents, or 2.7 percent, to finish at $18.50; graphics chip maker Nvidia Corp., whose shares fell 6 cents to $12.01; and memory chip maker Micron Technology Inc., whose stock rose 7 cents to close at $6.65.

Lipacis downgraded Intel, the world's No. 1 maker of microprocessors for personal computers and servers, because after two "blowout" quarters its earnings estimates have undergone "massive upward revisions," which has lifted the stock price. Lipacis wrote, however, that Wall Street may be underestimating Intel's potential to boost its gross profit margins.