Surveying the aftermath of Intel
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By Cody Willard 7/15/2004
Intel has been fumbling its execution, so it may not be wise to believe its problems affect the whole industry.
Analysts who are now getting more bearish are ignoring the seemingly robust demand implied by Intel's revenue forecast.
Juniper Networks' report drives this point home.
Analysts are really getting vocal about throwing in the towel on Intel (INTC, news, msgs) and the semiconductor rebound. Bloating inventories and a reduction in Intel's gross margins are the main reasons cited as evidence that the cycle is over.
However, as I've been saying, Intel has been fumbling and bumbling with execution. So is it smart to extrapolate higher inventories and lower gross margins at Intel to the rest of the industry?
Ignored in this "sky is falling" analysis is the fact that demand appears robust: Intel is expecting to do nearly $9 billion in revenue this quarter. That's a bump higher than the Street expected and the highest sales figure in the company's history. The company also set records this past quarter for motherboard units and connectivity product units.
Look at the forest, not the trees
That huge revenue guidance doesn't make me think the semi cycle ended somewhere earlier this year. It seems to me that if you want to extrapolate anything from Intel, it would be the fact that demand remains robust, even if the company itself is not executing as well as it should be.
It's hard to call Intel's valuation ridiculous at 14 to 19 times earnings, depending on whether you use this year or next and whether you exclude the cash on the balance sheet.
That said, I don't need to know how many processors Intel will sell this year. What I do know is that the teleconomy is on track for a sustainable rebound with nice steady growth. And, hey, that's what Juniper Networks (JNPR, news, msgs) is delivering. |
