After a long time in trying to get this off, here is
Part II,
OK, enough of that. So where do I think Intel is today? you ask.
I think that currently we are going through a reevaluation period for the recent high flying Tech Stocks. IMHO that "The Street" is, or will, reassess if they should continue to assign high P/Es to companies like MSFT, CSCO, CPQ, INTC and even IBM. After all, didn't these companies just tell us that margins going forward will return to their more traditional levels, (in Intel's case 50%). Well, I don't what to comment on the other companies, but relative to Intel, the answer is a definite YES. It deserves more than today's relatively conservative multiple.
I don't know how long this reassessment phase is going to last. For this reason I was, early last week, willing to sell Call options against some of my Intel core position. This strategy has permitted me to raise money to buy the smaller tech companies which I have mentioned here. Until now these companies may have been overlooked. Mind you I consider this to be a very aggressive posture, and I do not recommend it for most investors. However, this is what I have been feeling lately.
I should mention here, that I know that John Hull believes that much of the above is already priced into Intel's stock. But for me, and given my portfolio it made sense. Each, must evaluate their own circumstances and needs, and then act in a timely manner. Pick YOUR timing whenever possible.
I do not anticipate that this reevaluation phase will take long. In fact, for Intel it may well be over now. But in the end, there is no doubt in my mind, as I have said here before, that Global Investors must conclude that if one wants to do business in the WORLD, they must own an Intel PC. Whether you live in Asia, Eastern Europe, or Africa, you have to give Intel revenues. But, you tell me exactly how long this reevaluation process will take? At what point will those without conviction sell? At what price will all those investors who were promising to buy on dips, step up to the plate and buy. For Intel they will be one of the first companies to resume going up. As I said, they may have already begun. However, in an effort to protect myself during this phase, I bought IBM Puts this afternoon.
Today IBM's earnings looked good at first glance. However, IBM's strength, as reported, was from selling services and Intel Inside PCs. Also keep in mind that Merrill Lynch's analyst, Dan Mandrish (sp), had been predicting considerably higher earnings. Recall that Dan, a long time IBM Bull, was the analyst who started IBM up from the 80s price. He was one of the first and most important analysts to put out a "Strong Buy" recommendation. Also, as you are aware, Dan canceled his scheduled appearance on CNBC this evening, after IBM's earnings were released.
So I leave it up to all of you to evaluate my "feelings". However, as always, I reserve the right to change my mind at any time, or to be completely wrong.
Good Luck,
Jules |
