Fools on INTC....Holding the line on its $3.5 billion to $3.9 billion capital spending target sent a ripple through its otherwise favorable earnings report. If demand was in fact starting to pick up, shouldn't Intel be following suit? Is the company worried about long-term weakness? To the fiscal worrywarts out there, maybe four words of advice are in order: Open a history book!
Three years ago, Intel had the investing world buzzing. After devoting $3.4 billion to capital spending in 1999, it earmarked a hefty $5 billion for the following year. By that logic, 2000 should have been an amazing year for the industry and Intel. Well, it may have started out well, but that was the year the bottom fell out of the chip market -- and the tech stock market as a whole.
In other words, don't read too much into the company's capital spending projections. Tech companies that spend their time correcting three months' worth of profit guidance aren't going to be giving Nostradamus a run for his visionary money anytime soon.
Take Intel's report for its positives. The company is making so much money that it's been able to spend $1 billion on share repurchases every quarter while growing its cash investments to a whopping $13.4 billion.
Holding the line on its $3.5 billion to $3.9 billion capital spending target sent a ripple through its otherwise favorable earnings report. If demand was in fact starting to pick up, shouldn't Intel be following suit? Is the company worried about long-term weakness? To the fiscal worrywarts out there, maybe four words of advice are in order: Open a history book!
Three years ago, Intel had the investing world buzzing. After devoting $3.4 billion to capital spending in 1999, it earmarked a hefty $5 billion for the following year. By that logic, 2000 should have been an amazing year for the industry and Intel. Well, it may have started out well, but that was the year the bottom fell out of the chip market -- and the tech stock market as a whole.
In other words, don't read too much into the company's capital spending projections. Tech companies that spend their time correcting three months' worth of profit guidance aren't going to be giving Nostradamus a run for his visionary money anytime soon.
Take Intel's report for its positives. The company is making so much money that it's been able to spend $1 billion on share repurchases every quarter while growing its cash investments to a whopping $13.4 billion. |
