Mike: Buy your logic completely, re betting against monopolies or companies that are doing well.
Three months ago, INTC was a monopoly, and was doing well. Last Fall was a particularly delightful period for the company, as four big new Japanese manufacturing pipelines had to be filled, even as Intel's regular customers' needs had to be satisfied. Not the case now. The K6 has experienced a solid reception in the field, and others (CYRX) are joining in. The pipelines are also more than filled. That said, it's not the competition per se that is the real problem for Intel, it's not being able to force clients up market, and being forced to compete at the bottom end of the market, which is where an increasing percentage of the action is. In my judgement, INTC is just beginning to experience a really nasty margin squeeze, and it's going to be exacerbated by all that new capacity, and by the PC slowdown. Their telephone conference call, wherein management suggested that revenues would be flat, margins flat to down, and expenses up, sure sound like lower earnings to me for the next quarter or two.
All of this sure reads well on paper, and sounds logical, but isn't worth a fig, given the mass vertical ascent in progress.(g) So far, I haven't gone near INTC, even through puts, and agree with you that other targets are more inviting (love MU and GTW). I live in hope that the market knocks them off a few at a time, rather than in one great big meltdown. Intel's fate is tied to the fate of its clients, and those unfortunates have a long and dreary price war to wage. Personally see Intel's narrow focus on a single, highly cyclical commodity market as a definition of the word "vulnerable". Also think that few will deem to short it, which suits me fine for obvious reasons.
Best, Earlie |
