Joey: I admire many of the people on this board. You have obviously had a good ride on Intel and have substantial book profits. But that should not make you blind to changes in the marketplace and the effects on INTC.
Re: <<<<you're assuming that these price cuts are in response to competition, which I think is a wrong assumption. Intel is probably more worried about a slowing PC market.>>>>
Of course the price cuts are in response to competition. The price cuts have come sooner and have been greater than planned and are obviously designed to hurt the competition. Why else would you cut prices so severely when you have a dominant share of the market?
As for the theory that Intel is trying to spur demand: (1) actually, it is AMD and Cyrix who are doing just that by supplying high performance chips for PC's that will be priced under $1000, where the potential for market penetration remains greatest; and, (2) at Intel's current level of production, there is little cost reduction from scale economies. Besides, Dataquest apparently expects 19% growth in PC demand this year, and double digit growth to continue through 2000.
WATCH OUT BELOW! Technically, INTC is acting in a very weak fashion. It broke a long term uptrend line recently and if it closes below 140 today, it will have broken down from an upside down flag formation. While still on a BUY signal under the Decision Point analysis (on AOL), the WARNING! flag is flying, and I expect DP to switch to a sell signal within a few days. Next support is in the low 130's, in the vicinity of the 200-day MA. I would advise all those planning new purchases of options or warrants, or on margin, to wait for the low 130's, and then take a very hard look before proceeding.
A few weeks ago, I predicted that INTC would go below 140 before rising above 150. It did go to 150 on an intraday basis but not on a closing basis, so I suppose my prediction is intact. We will see where it closes today.
Charlie. |
