Buyers May Be Holding Off on Pentium PCs : Computers: Despite Intel’s claims to the contrary, shoppers apparently are looking elsewhere.

Although Intel Corp. and some personal computer vendors continued to maintain Monday that a widely publicized flaw in the Pentium computer chip is not hurting sales, evidence is mounting that corporate computer buyers are delaying purchases of Pentium PCs and that consumers are beginning to take a second look.

Meanwhile, investors grew increasingly nervous about the Pentium problem, driving Intel shares down $1.69 to $57.81 Monday on the Nasdaq. And a new study by Vaughan Pratt, a Stanford University computer scientist, became the latest to indicate that the problem is worse than Intel has reported.

The flaw in Intel’s flagship microprocessor can cause errors in some division calculations. Intel has contended that only a few highly sophisticated computer users dealing with large numbers would be affected. But others--including IBM Corp., which last week stopped shipping Pentium machines--dispute that assessment.

Pratt endorsed the approach IBM used in testing the Pentium, and also concluded that significant errors can be caused even when dealing with two- or three-digit numbers.

Many are furious that Intel kept the problem a secret until it was disclosed by a Virginia math professor last month. And the company has exacerbated the problem with what many regard as an arrogant refusal to acknowledge the seriousness of the issue or offer unconditional replacements.

PC vendors and retailers have worried that the Pentium flap, coming in the midst of the Christmas shopping season, would spook individual consumers, who have flocked to computer stores in large numbers for the first time this year.

That does not appear to have happened so far.

“We’ve seen steady week-to-week gains,” said David Goldstein, president of Channel Marketing Corp., a Dallas research company that monitors retail computer sales almost daily at this time of year. Goldstein said overall PC sales are up 32% to 33% from last year, while sales of Pentium-based machines are climbing even faster.

But anecdotal evidence suggests that some potential Pentium buyers are turning elsewhere.

“It seems like we had more people interested in the Pentium before,” said a sales clerk at Office Depot, which sells PCs along with office equipment. “More people are asking for the 486 now,” he said, referring to Intel’s less-powerful chip. Bloomberg Business News reported that J&R; Computer World in New York and other retailers had seen a Pentium slowdown.

And corporate buyers clearly are holding off. David Wu, an analyst at S.G. Warburg, says large buyers have put off purchases of Pentium computers until February, when Intel comes out with its corrected chips. Scott Smith, general manager for desktop products at AST Research, confirms that corporate customers have put off purchases until bug-free chips are delivered.

In part, corporations are worried about possible liability arising from incorrect work done with faulty PCs. Intel itself is also facing a number of lawsuits from customers who say their work--and the value of their PCs--has been compromised.

State attorneys general have jumped into the fray. Connecticut Atty. Gen. Richard Blumenthal raised the possibility of legal action against Intel if the company does not adequately respond to consumer concerns.

By misrepresentation of the magnitude of the chip’s defect and by being unwilling to quickly replace flawed chips, “we think they are violating state law,” Blumenthal said. He is discussing possible action with the attorney generals of four other states.

Blumenthal’s counterpart in Florida, Robert Butterworth, sent his own letter to Intel raising a long list of issues, including the whether the chip might currently be used in areas that could affect public safety, such as the design of bridges and buildings.

Intel spokesman Howard High said the Pentium flaw would not have safety implications for designers of such structures. “There aren’t many people building bridges to the precision of nine digits,” he said.