Intel: Hard To Spot Breakout, Easy To Hold.(THE SMART INVESTOR)(WINNING WAYS)

Byline: KEN HOOVER

Intel got itself in a pickle at the end of 1994. A professor discovered that its new Pentium chip couldn't do long division correctly past the ninth place to the right of the decimal point.

Intel pretty much blew off the criticism. It promised a new chip to anybody who regularly did long division going out more than nine decimal places -- not very many people. The company learned the hard way that people want their computers that can add, subtract, multiply and divide precisely, even if they don't need that precision.

Finally, Intel relented and promised a new chip to anyone who wanted one.

The company later admitted it bungled the controversy from a public relations standpoint, but in the end, it was a tempest in a teapot. Intel was still the world's leading chipmaker.

Its processors were in nearly every computer coming out of factories. The end of the imbroglio marked the beginning of a nice advance for the stock.

When Intel started its move in January 1995, earnings for the four prior quarters were up 15%, 12%, 14% and 16%. Sales rose 31%, 30%, 28% and 35%. It had a five-year growth rate of 44%. The Earnings Per Share Rating was 89. The Relative Strength Rating was 82. The Accumulation/Distribution Rating was B.