In my opinion, you can't keep improving earnings exponentially when you are cooking the books. You run out of tricks if you know what I mean. For example, Intel's 2001 estimates are for profits of $1.5 billion higher than this years estimates. We already know that Intel has taken over $3 billion in one time gains from stock sales in the first 2 quarters this year. This means next year in order for Intel just to meet estimates, they are going to have to come up with $4.5 billion in profit assuming the core business has flat earnings. While I doubt the earnings from the core business will be flat, I highly doubt they will be $4.5 billion higher than this year.
Chic,
You make the assumption that Intel will stop trading stock next year. Why do you think that? It seems to me that its too lucrative a business for Intel to stop. And think about it....Intel is the perfect place for this kind of business. It is the chip god on top of Mt Silicon. How many of the new, state the art, innovative chip startups come knocking on Intel's doors wanting Intel to love them? 20% or 30% maybe 75%, try 100%. They all want Intel inside and if not inside at least on the company brochure. Intel has its pick of companies to invest and the technological expertise to evaluate which company will probably make it and which won't. Even when they screwup like with ANCR, they make major bucks. And what's really convenient is that Intel makes a ton of money on its other businesses so that is has a ton of money to sink into these startups...a perfect match.
Personally I don't think Intel is getting out of the venture capital business anytime soon.....and I bet the money keeps on rolling in. As for cooking the books, I don't think so...Intel is way too visible to be doing sh*t like that. No question Intel is arrogant but its not stupid....not in this lifetime. You need to check the credentials of the posters on the threads Eric mentioned who are making these claims. And if they tell you no one will believe you if you pass on their claims, they're right.
There are many companies in this same situation, it is far from just an Intel or Cisco problem. Eventually, I think this will be one of the leading causes in killing the Naz and maybe the whole market.
As for CSCO, what is going on here...are these posters suffering from some kind of tech penis envy. The two major problems with CSCO is that its gotten a head of its valuation and there was some insider selling of shares that ended today. That has kept the stock in a basing period for the past 3-4 months.
I know all this because I am getting ready to buy some more...I already have some in my 401. The only concerns I had when I reviewed the lastest financial statements was that their margins slipped....of course this is like saying T. Woods slipped cause he came in second in his latest tournament....their GM dropped from 64+% to 63+%sequentially. My other concern was the slowing of their inventory turnover rate...however slower, its still fast by industry standards. CSCO has annual revenues of 18 billion and yet, can still grow those revs 50-60% YOY...if that's sh*t, then we need to close the net down and go back to abaci.
As for the Naz, IMO there are two things that can kill it....a major recession, or man invents everything there is to invent and the tech revolution comes to an end.
ted |
