Lindy, Tony V., Unq & thread.....thoughts on Intel....
Great post Lindy..
INTC: I pronounced this company dead in February, it has gone from 66 to 89 since then. Pretty good for a dead guy! Up almost 48% for the year. The trailing PE of 45 looks low by today's standards, ( I bought it in '95 at 14!!), but seems to be the best PE that the street will give it.
Intel's trailing P/E is high; but I wonder if P/E doesn't shift with the Market's expectations for a company's future prospects. Using Baseline's company profiles from Etrade(current for Aug 25th), Intel's P/E has moved upward since 1994. The P/E in 1994 was 15; sequential years saw the P/E high at 23,31,29,38, and 41 this year. The same is generally true for MSFT; since 1994, yearly P/E highs are: 33, 48, 48, 60, 73, 83. For CSCO, yearly P/E highs are: 45, 47, 48, 43, 79, 94.
When I look at this, I see 2 things: first, I think the market is capable of awarding a higher P/E to Intel, and I further think this is very likely to happen as revenues begin to grow from higher profit margin arenas, chiefly penetration into Server microprocessors, network chips, profits from VC investments in Internet start-ups, etc. Pronouncing Intel as dead (or in my business, not dead but moribund) would be prescient had it stayed exclusively in PC-microprocessors. But like MSFT, INTC is expanding its boundaries, with fingers into everything. Second, being a worrier, I worry that the P/E expansion in the past 2 years for the gorillas will come back to bite us, somehow.
Unq has said that he doesn't like INTC in part because he doesn't like cyclicals. If INTC can shift substantially into other territories (does anyone here want to bet against INTC management?), then I would think revenue streams from an ever widening array of niches would lesson the cyclical nature of PC-microprocessors.
Best to the Thread,
Apollo |
