Burt,
For some time now I have been of the opinion that we are witnessing the demise of Apple Inc. So that when you wrote, "I certainly don't want to see INTC advance over the grave of an admirable competitor,"
I suggest, that you should have expressed your concerns to Andy Grove three years ago, because now Burt, it is too late to reverse the process, and the rules of the game, that Intel has been operating under since its inception.
I am not as magnanimous as you, nor do I have sympathy for those that bet against Intel. As you well know Burt, from being a long term holder of Intel stock, we have suffered for many years waiting for the rest of the world to see what we saw, and thereby assign a higher P/E to INTC. A P/E which would better reflect Intel's short and long term position of leadership and more acurately reflect its true value. Perhaps now, investors will finally realize that Intel, on top of everything else, is even gaining significantly in market share. In recent months it has become apparent that this gain in market share has been at the expense of APPL, CYRX, IBM's Power PC, AMD's K-5, and DEC's Alpha chip. Therefore, combined with the expansion of gross profit margins, global investors hopefully will finally assign a higher P/E ratio. One which Intel has worked so hard to achieve.
It has become somewhat puzzling to me, in recent weeks, why the "Street", nor even others on this SI Intel thread, have not recognized or written about the commonality shared by all these tech companies that have pre-announced expected earnings disappointments for Q2. If we look at the companies that have announced expected shortfalls, in Q2 earnings i.e. Quantum, Sierra, Apple, Digital Equipment, IBM, AMD, and CYRX, they all have one thing in common. All of them, without exception, lose revenues or market share, if Intel gains market share.
And that is precisely what I believe is what is happening now.
Unfortunately, while Intel's stock price has held up rather well over this time, these other companies have taken large hits in their stock price. But, so far INTC has not increased its share price, as I believe, it should have. In other words, I believe, no one has come to the realization that the decrease in demand for these companies products, is not due to an overall decrease in PC demand, as they would have us believe, but rather is due to the unique circumstances of these companies. And those circumstance are to the benefit, both short and long term, for Intel.
I am of the opinion however, that this situation will soon be corrected once Intel announces its Q2 earnings on July 16. As I have written here before, I am using from my own calculations for Q2 estimated earnings, $1.12 to $1.15. This is based on an anticipated $0.10 resulting from a gross margin percentage improvement over Q1, and $0.01 - $0.02 increase from slightly better than flat revenues. I caution the reader that these estimates are my own, and are .05 to .07 higher than the mean First Call Analyst's estimates. Therefore, as always, I reserve the right to be completely wrong, as I no longer get paid to be right every time.
Jules |
