April 15 (Bloomberg) -- The stock market may not be for the sane. Intel Corp., the world beater in computer chips, late Tuesday reported a first-quarter profit leap of 89 percent to $1.73 billion, or 26 cents a share, on a 20 percent increase in sales to $8.1 billion.

The good news didn't prevent Intel shares from falling 30 cents to $27.37 yesterday. This wasn't a case of many investors having bought in anticipation of good news and then selling when it happened. People chose to focus on Intel Chief Financial Officer Andy Bryant's forecast indicating the company's second- quarter sales might gain only 12 percent. Only.

While there's nothing wrong with treating the future with more interest than the past, you might think that Intel was one stock that wouldn't be dumped simply because the second-quarter reward for shareholders might not be as plump as the first quarter's.

Intel dominates. Its stock might be one investors comfortably could buy and forget about. Intel took over the market for microprocessors when PCs revolutionized the computer industry in the 1980s. Its products now power more than 80 percent of both personal computers used by individuals and the servers running business computer networks.

The company can charge high prices. Its gross profit margin, sales less the cost of sales, was 60 percent in the first quarter, up from 52 percent a year earlier. Intel spends about $4.8 billion a year on research.

No Respect

Santa Clara, California-based Intel has been treated oddly by investors before. In early 1996, for instance, its stock traded at just 12 times its earnings, roughly two-thirds the P-E for the average stock in the Standard & Poor's 500 Index at about that time.

People may have treated Intel no better than a car manufacturer because the company continually kept developing faster microprocessors -- making their predecessors virtually worthless and bringing new meaning to the concept of planned obsolescence.

Then might have looked like the optimum time to buy Intel shares -- though early buy-and-hold investors could have bought the stock in 1986 for 34 cents a share, adjusted for splits. In 1996, Intel was a highly profitable high-tech stock with a low- tech price-earnings ratio.

Extremes

In the stock market madness that followed, Intel went from undervalued to overvalued. Intel shares traded at a record $75.81 in 2000 and their P-E topped out at 69 in January 2002. Even here, Intel wasn't given much respect relatively -- the average P-E for S&P 500 stocks reached a high of 63 in March 2002.

The ensuing market bust took Intel stock as low as $12.95. The company's profit in each of the last three years was less than it was in 2000, belying any thought that Intel market power made it immune from a slump. The shares currently trade at 27 times the company's earnings, compared with 22 times for the average S&P 500 company.

Intel's story could be the tale of any company and its stock, of course. Perceptions and share prices change quickly. Historically, the greatest risk to Intel shareholders has been that a rival or rivals would steal the market with better products. That hasn't happened but Intel shares have still had a weird ride. It is enough to drive investors nuts.

To contact the writer of this column: David Pauly in Normandy Beach, New Jersey, at dpauly@bloomberg.net.

Last Updated: April 15, 2004 00:05 EDT