Re .Looking for an Undervalued Web Infrastructure Play? Try Intel
compare this with an article in the Barron's some weeks ago :
Message 11426923
Message 12262355
Barron's: Even as Intel's prospects start to look cloudy, investors refuse to see anything but blue skies
S&P : Looking for an Undervalued Web Infrastructure Play? Try Intel
Barron's: The company stands at what co-founder and former chief executive Andrew Grove calls an "inflection point," ... the moment of inflection came last year when the sudden popularity of PCs selling for less than $1,000 began to cannibalize the longstanding sales growth of high-end PCs
S&P : While we don't believe Intel will dominate these[ new sectors] to the extent it does the microprocessor market, we do believe Intel will prove a meaningful competitor and that even 10% share of these fast-growing markets should prove profitable.
My comment - never wondered how Palm (10% of 3com revenues) has been able to boost a crap stock from the low twenties to the mid-forties ? - End of my comment -
Barron's: If the rollout of broadband access to the American home comes slower than expected, demand for Intel-powered servers and networking devices may not prove strong enough to make up for the slowdown in the company's revenue growth from the PC market.
S&P: Intel has created a Web hosting business -- and it's signed up some important customers. If you want to know how important this business is expected to be over the next decade, take a look at how the market's valuing Exodus Communications (EXDS) and other Web service providers. (The ASP, or application service provider, market is forecast to reach $22 billion by 2003, according to Dataquest.)
Barron's: What if, for example, the competition for server chips from the likes of Sun, HewlettPackard and IBM proves fiercer than expected?
S&P : The company is certainly further ahead than the likes of Hewlett-Packard (HWP) in terms of product -- and in its organizational structure, which enables it to move nimbly, quickly and profitably after opportunities.
...
S&P :A little known secret is that Intel-based servers are already quite popular with many of the dot.coms of the world.)
Barron's : The shares currently trade at 33 times consensus estimates for 1999 and 28 times estimates for 2000. That's nearly twice the company's expected growth rate in 2000. If Intel's multiple were to drop to, say, 1.5 times growth, its shares would trade at around 59. And if they were to trade at one times growth, the shares would fetch just 39. Once investors wake up to the fact that Intel's glory days are over, that could easily happen.
S&P :Selling at just 25 times our 2000 EPS estimate, we believe Intel (ranked , buy) is one of the most undervalued Internet infrastructure plays. |
