Intel's Pentium Chip Sales Remain Strong Despite Flaw Criticism

Strategic Insights -

Demand for Intel's flawed Pentium chip continues to be strong, with customers asking questions about the impact of the flaw on their computing, but not buying fewer chips. Intel's sales are maintaining an "extremely strong pace," according to the company's spokesman, Howard High. A study by Merrill Lynch & Co. Inc. found no drop in demand, with the company forecasting Intel will ship 2.8 million Pentiums during the fourth quarter, up from 1.4 million in the third quarter. Merrill also forecasts about 3.8 million Pentium chips in the first quarter of 1995.

Key Takeaways:

  • Sales of Intel's Pentium chip remain strong, with customers not buying fewer chips despite criticism of the flaw.
  • Intel's sales are maintaining an "extremely strong pace," according to the company's spokesman, Howard High.
  • A study by Merrill Lynch & Co. Inc. found no drop in demand, with the company forecasting Intel will ship 2.8 million Pentiums during the fourth quarter, up from 1.4 million in the third quarter.
  • Merrill also forecasts about 3.8 million Pentium chips in the first quarter of 1995.
  • The flaw in the Pentium chip affects division operations in advanced calculations, and Intel says it would show up only once in every nine billion division equations.
  • International Business Machines Corp. has stopped shipping Pentium-based personal computers due to the flaw, but Microsoft Corp. and others in the industry have supported Intel.
  • Critics from trade magazines, business newspapers, and Internet chat groups have continued to criticize the flaw, but Intel says most customers have come out in support of the company.

Statistics:

  • 2.8 million Pentium chips expected to be shipped in the fourth quarter (Merrill Lynch & Co. Inc.)
  • 1.4 million Pentium chips shipped in the third quarter
  • 3.8 million Pentium chips forecasted for the first quarter of 1995 (Merrill Lynch & Co. Inc.)
  • 9 billion division equations before the flaw shows up in advanced calculations (Intel)
  • 24 days: frequency of errors in routine calculations as predicted by IBM
  • $1.69 loss per share for Intel stock on the Nasdaq Stock Market yesterday

Sources:

  • "Demand for flawed Pentium chip remains strong" - no publication date mentioned
  • Howard High, spokesman for Intel Corp.
  • Thomas Kurlak, analyst at Merrill Lynch & Co. Inc.
  • International Business Machines Corp. statement - "IBM Halts Shipment of Pentium-Based PCs Over Error Flaw"
  • Microsoft Corp. statement - no publication date mentioned
  • "Pharmaceuticals Manufacturing Association warns clients to avoid buying Pentium machines for certain uses" - no publication date mentioned
  • "Gartner Group technology advisory service warns clients to avoid buying Pentium machines for certain uses" - no publication date mentioned