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A bomb from Morgan Stanley: Same old story of "Price War" for the last two years!!

U.S. Stock-Index Futures Drop; Intel, AMD, Micron Shares Fall

By Marco Bertacche and Lynn Thomasson

Oct. 3 (Bloomberg) -- U.S. stock-index futures fell after Morgan Stanley recommended investors sell shares of Intel Corp. and Advanced Micro Devices Inc.

Intel and Advanced Micro Devices, the world's biggest makers of personal-computer processors, declined after Morgan Stanley said a supply glut may lead to a price war. Micron Technology Inc. tumbled after the largest U.S. maker of computer-memory chips reported a bigger loss than some analysts estimated.

Standard & Poor's 500 Index futures expiring in December lost 5.5 to 1,549.1 as of 7:42 a.m. in New York. Dow Jones Industrial Average futures fell 41 to 14,065. Nasdaq-100 Index futures decreased 8.75 to 2,126.75.

``Investors have been overly optimistic in pricing,' said Simone Freschi, head of the equity desk at Banca Monte dei Paschi di Siena SpA in Siena, Italy. After ``some negative earnings results, all eyes are now on jobs data this week.'

U.S. stocks were little changed yesterday, with most shares rising after the pace of takeovers picked up and investors speculated falling August home sales may mark the bottom of the housing slump.

An ADP Employer Services report due today may suggest hiring still lags behind the first half of 2007. The Labor Department on Oct. 5 may say the nation's employers added 98,000 jobs last month, after reducing jobs by 4,000 in August, according to the median forecast in a Bloomberg News survey.

Intel, AMD, Micron

Intel fell 27 cents to $26.09 in Germany. Advanced Micro decreased 18 cents to $13.02. Morgan Stanley analyst Mark Lipacis wrote in a research note yesterday that ``the risk is high that Intel reacts to AMD's increased competitiveness with aggressive price cuts,' the note said.

Lipacis gave ``underweight' recommendations to both companies, saying their shares will trail the rest of the semiconductor industry during the next six to 12 months.

Micron Technology declined 35 cents to $11.44 in Frankfurt. The company reported a fourth-quarter loss of 21 cents a share, larger than ThinkEquity Partners Inc. analyst Robert Burleson's estimate of a 9 cent loss.

E*Trade Financial Corp. retreated 28 cents to $13.07 in Frankfurt. The online brokerage was accused in an investor lawsuit of issuing false and misleading statements about rising delinquency rates in its mortgage and home equity portfolios and assets backed by them. Pam Erickson, a spokeswoman for New York- based E*Trade, declined to comment on the complaint.

GM Upgrade

General Motors Corp., the biggest U.S. automaker, rose 20 cents to $37.25 in Germany. The shares were upgraded to ``neutral' from ``sell' by analysts at Bank of America Corp., who said an agreement with the United Auto Workers union offsets a worsening outlook for sales. Analysts Jairam Nathan and Joseph Spak also lifted their price estimate for the stock to $37 per share from $25.

The ADP report, due at 8:15 a.m. in Washington, may show companies added 58,000 jobs in September, according to the Bloomberg survey median.

A separate report may show U.S. service industries expanded in September at the slowest pace in six months, a sign the housing recession is seeping into other parts of the economy, according to a Bloomberg survey of economists.

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Last Updated: October 3, 2007 07:44 EDT
http://www.bloomberg.com/apps/news?pid=20601103&sid=aR.LdATFKw70&refer=us