willcousa, re: "So intc was unable to meet demand, had competition and still held market share. Why does a company in that position need to build capacity ahead of need? Isn't the smart way to play this to build capacity only when need is proven? And perhaps have the chance to increase prices in the process? Didn't materialize buy possibility was enhanced."
I've owned Intel for many years, and for many years they have executed very, very well. Over the last year, that has changed. The reason you own cyclical stocks is that the large gains during the strong cycles out-weigh the flat to down performance during the weak cycles. The first problem with Intel's problems is the lost opportunity for profits and stock appreciation. It appears that with good execution Intel could have had blow out earnings for the last two quarters.
The second problem is competition. We can debate if Intel lost market share in the 1st quarter, I happen to think they did (Gateway?), at the least in retail. In any event they have a stronger, better percieved competitor in AMD. Would this have happened if Intel had performed to their previous standard, certainly not to the same extent.
So, on a short term basis, Intel is fine, they are in the middle of a strong cyclical period. But on a long term basis, the current mis-management will continue to impact their market position and valuation.
John |
