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Packard Bell's Money Woes Hurt Intel

A report by Intel to the Securities and Exchange Commission (SEC) that it converted part of one of its five largest customer's bills into a loan caused some investors to take action. Intel stock fell 4.8 percent to $60 when the November 14 report became known on Monday.

Although the customer whose unpaid account amounts to $470 million was not named in the report, analysts are saying it's Packard Bell; the company's extensive investment in Intel's 75-MHz Pentium microprocessor chips doesn't seem to be paying off.

Customers appear to prefer faster, more costly 100-MHz machines. That's good news for Compaq and Hewlett-Packard--their 100-MHz models can better handle the demands of the latest wave of high-powered 3D games for PCs.

Industry insiders predict that Packard Bell is likely to reduce prices to unload as many of the machines as possible during this gift-giving season. Such a move could spark a price war that would make it a happier holiday for those in the market for a new PC.