Tuesday, the 17th, Intel (Nasdaq: INTC) reports third-quarter 2000 results. Anticipation has already been sucked out of the announcement, however, by the company's preannouncement on September 21 that it would fall short of estimates. Until last month, Intel had only preannounced quarterly results six times since 1990, and only twice were the preannouncements negative. And, both negative occurrences were recent: in the second quarter of 1997, and in the first quarter of 1998 (precisely when we were buying the stock).

Since the cat is out of the bag, Tuesday's earnings report shouldn't hold surprises. Revenue is expected to rise 3% to 5% sequentially, to approximately $8.6 billion. That represents healthy 18% year-over-year sales growth. The average earnings per share (EPS) estimate for the quarter is $0.38, which is seven cents below the previous quarter, but 38% above last year's same quarter.

Despite price cuts, the business remains very profitable, with 62% gross margins expected. Plus, earnings per share is still expected to rise 42% this year compared to 1999. In 2001, however, current estimates call for only 8% earnings per share growth.

This year's earnings growth rate is high, partially due to a relatively weak 1999 and due to large investment gains this year. These factors will work against Intel in 2001, as will Intel's missteps this year, which include a delayed Pentium IV and the need to upgrade to new micron (0.13) production before the Pentium IV can be produced in great volume. Meanwhile, Advanced Micro Devices (NYSE: AMD) is strengthening.

Last quarter, 22% of Intel's sales took place in Europe. This quarter, Intel blamed Europe for its weak results. However, how much of that shortfall is due to lost market share? Perhaps a significant amount.

Following Tuesday's announcement and conference call, we'll have new thoughts to share. For now, at $36 per share, Intel trades at 22 times this year's EPS estimate and 20 times year 2001 estimates. Even in light of a potentially slow 2001, the stock is priced such that we may favor buying more shares -- that is, as long as we remain confident in the long-term business.

Johnson & Johnson's third-quarter preview
The most diversified healthcare company in the world, Johnson & Johnson (NYSE: JNJ), is expected to report earnings per share of $0.88 on Tuesday as well, representing 10% year-over-year EPS growth. Sales should rise 6% to 7% to approximately $7.2 billion.

In the first half of 2000, sales rose 8%. The strong dollar overseas and J&J's pharmaceutical price increases in September could notch sales growth down by a percentage point or two. Efficiencies should help J&J achieve EPS estimates regardless, en route to EPS growth of 12% this year (most likely!). Although anything may happen, the year 2001 appears likely to provide earnings growth of 12% again.

Pharmaceuticals account for 40% of J&J's sales and two-thirds of profits. J&J has 26 new molecular compounds and/or indications in clinical development and/or filed for FDA approval, and 15 of these could reach the market before 2003. At $96, the stock is at 28 times this year's EPS estimate and 25 times 2001 estimates. So, 12% EPS growth year after year? We'd like that just fine. And, maybe the politicians will grant us a buying opportunity, too. Either way, we'll keep dripping into J&J for free.

Mellon Financial's third-quarter preview
Finally, Mellon Financial (NYSE: MEL) will announce results next Tuesday, too! (These companies couldn't have made it easier by announcing on different days, eh!?) Mellon is expected to post earnings of $0.51 per share, en route to consistent 12%-13% annual growth. We'd like that, too... juuuust fiiiiiiine.

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