Skeeter:
Good comments.
See my comments above on Intel's numbers. Given the share price, and given the expectation, those numbers were disastrous. Even the reduced revenue expectation was missed by $150.0 million (minimum).
Skeeter, don't get sucked in by the bullish interpretations placed on everything having to do with the PC industry. We are heading pell-mell into a disaster. The funds are buried in these stocks, and even the fund managers who know that they are insanely priced are afraid to bale, for fear of missing more of the momentum-induced upside, or because they don't know where they would put the dough if they sold. This means that far too many of them will stay until they all get a "panic attack" together. At that point, there will be no buyers to cope with a multitude of sellers. Many of them already have itchy trigger fingers, as they recognize that by all intelligent valuation methodologies, the whole sector is priced in Disney World.
I don't think you will see 20% PC unit growth this year,... not by a long shot. Business isn't buying, Latin America is slumping, and Asia is not strong. Even if we got lucky and actually achieved 20% unit growth, revs are not likely to see 2%. I suspect it will be more like a 5% decline on a year-over-year basis, but that is just an estimate at the moment. Certainly without something new to put some shine on the coming Fall/Christmas sales period, it is more likely to be a real bomb.
I will stick with my view that Intel is heading for a disaster, especially if AMD's K7 is delivered in quantity. Intel's biggest problems are never discussed. They include...
- where do we go after .18um? That is the end of the line for them for the foreseeable. Even at this level, they are having difficulties.
- excess capacity. This is a huge problem. That is why I worry about those inventories (which are building fast). As demand continues to slow, capacity issues will grow ever more important. Intel has precious little experience in handling this problem and I don't think they will handle it well.
- The mad folk dream on about the internet driving ever greater capacity needs, but this is not happening. Internet growth is already showing the first signs of attenuation. In my opinion, it is a stock-related thing in any event, and when the markets get pounded, many investors will cease to find a reason to spend hours on the net.
Heresy, I know, but also common sense. The net is not the second coming that some would have you believe it is.
- Nothing new. Intel really hasn't come up with anything new for years. The PC is now a ho-hum product and the general public and business are simply not interested in buying ever faster machines. The stock prices do not reflect these facts (yet), but they will.
Best, Earlie
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