Barry and Thread - Jubak's latest take on INTC. FYI.
moneycentral.msn.com
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When all the market wants to hear is good news, I think it's my job as an investor to avoid getting swept away with the crowd. And when all anyone wants to talk about is disaster, I believe I should be digging for companies that are announcing a steady stream of good news to deaf ears.
I've been watching three stocks do just that recently: Intel (INTC), Coca-Cola (KO) and Pixar (PIXR). The stories at all three of these companies have improved markedly in the last month or two, but the stocks have languished (or worse). The first two, I think, are building up a case for a breakout to the upside once the summer is over. I like Pixar in that time frame too, but I'm adding it to Jubak's Picks now, since the stock has a short-term catalyst that might actually give it an early boost, even in a market focused on the negative.
Intel
Here's a partial list of the good news the semiconductor maker has delivered in the last six weeks.
In its quarterly earnings report, Intel announced that it had not only stopped losing market share at the lower end of the PC market to Advanced Micro Devices (AMD) and National Semiconductor's (NSM) Cyrix unit, but had gained sales against these competitors.
In that same report, Intel reported radical reductions in manufacturing costs. The company is ahead of schedule -- and at least three months ahead of Advanced Micro Devices -- in moving to 0.18 micro production. At this smaller size, Intel gets more chips out of each piece of silicon and that reduces the cost of making each chip.
National Semiconductor threw in the towel and announced that it would exit the PC chip business.
Intel announced a new generation of the StrongArm chip that it acquired from Digital Equipment that will accelerate Intel's entry into the market for information appliances. The new StrongArm chip uses half the power and runs almost three times as fast as the previous version.
Intel has inked a series of acquisitions -- the purchase of Level One Communications (LEVL) is the most important -- that continue the company's march into the communications chip business.
The company's reward for all this hard work? Intel's stock has tumbled 21% since April 26 and is now about 40% below its February 1999 high.
I understand the reasons for this, but they are all short-term. June-quarter earnings look light. Daniel Niles of BancBoston Robertson Stephens sent the stock almost $3.50 a share lower by warning that Intel could miss analyst estimates by 2 cents a share. He cited price cutting by National Semiconductor as it quits the business, the continued erosion of margins as the market moves toward the sub-$500 PC and the normal difficulties of the June quarter. With the market in its current state of mind, those are powerful facts. Come September, I don't think anyone will care.
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