Paul and All.
Re "Whisper numbers"
As you know, I agree with you about the ABSURDITY and the popularity of whisper numbers. However, in this latest case, I believe, the elevation of its importance was more the creation of the media, than it was from the analysts. From what I have been able to piece together, Goldman Sach's analyst made a comment, at their morning meeting Thursday, that Intel might find it difficult to meet, what he thought, was the whisper number, $2.15 to $2.20. He did not say, as was reported, that this was "His" number.
That afternoon, Thursday, David Faber of CNBC, was asked to explain why he thought Intel's price was down for two days in a row. In an attempt to explain what seemed to be the unexplainable,
Faber stated that maybe it was because "Wall Street" thought that Intel may not be able to meet the "raised bar" of the whisper number, as stated by the Goldman Sach analyst. From that point on
the "whisper number story" had a life of its own. The story now was rerun on each of CNBC's replays as Intel continued to sell off. The more INTC sold, the more the media repeated the story, as everyone continued futilely to search for new reasons to explain the sell off.
The next reason that CNBC came up with was that Intel feared competition from AMD. As evidence they pointed to Intel's announced plans to cut prices. No matter that Intel cuts prices almost every quarter, no matter that Intel did not say how large the price cuts would be, no matter that there is no evidence that AMD is making any significant inroads. What mattered was that the media could now provide a seemingly plausible answer to what was unexplainable, i.e. Why Intel had dropped 15 points in three days?.
It is at times like this that I regard as buying opportunities. When Wall Street acts in an irrational way, as it sometimes is apt to do, and which I believe it is doing now, many investors with little conviction, or those who have not lived their lives in this computer industry as we have, throw in the towel and sell out. But it is at these times, that those of us who understand that none of Intel's fundamentals have changed, seize the opportunity.
Just as in January, when I saw investors here on SI buy Intel with "irrational exuberance", and I sold INTC Calls, I now believe the pendulum has swung the other way and investors are selling for irrational reasons. Consequently, on Friday, I bought more INTC Calls and sold INTC Puts. For me, this recent sell off does not make sense and for this reason I am willing to take the gamble, as I have so often in the past.
Now I could be wrong. I did note that on Friday afternoon there were some rather large blocks selling at the bid price, and volume was unusually high, but the risk/reward odds, over the long term, seems to me, to be in my favor at this time.
On another subject.
When I returned from my travels this week, I noted that there was little attention given to the fact that two weeks ago Intel failed to get an injunction against AMD for shipping K-6 chips without the Intel MMX trade mark imprinted on them. Although, I admit, that I no longer read all the posts on the other Intel thread, there did not appear to be any posts relative to this judicial decision. Therefore, in an attempt to bring myself back up to speed after my recent travels, I called Intel's Investor Relations. I was told that I should keep in mind that the Judge's decision, two weeks ago, was only his refusal to grant an injunction, and not on whether AMD must use the MMX Intel trade mark. I was further told that if the trade mark does indeed become enforceable, than AMD may be required to recall ALL of its K-6 chips which do not state that MMX is an Intel trade mark.
It is therefore very surprising to me that the media has not picked up on this potential AMD liability. A potential liability that now hangs over OEMs who sell AMD K-6 chips, and consumers who buy AMD K-6 chips. Therefore, in many ways, with the issue of the use of the MMX Intel trade mark still unresolved, AMD has assumed yet another huge risk. A risk that will deter OEM's from committing to the K-6, and a risk to consumers who buy AMD K-6 chips.
Regards,
Jules |
