J and Joey,
I agree with J that Intel cannot expect a significant PE expansion, there is too much risk that a downturn in the PC industry would idle all those expensive fabs. Intel, no matter how good a company they are, is 100% tied to the PC growth rate, which they influence but don't control.
Intel, as of last Friday, was trading at a 20 trailing PE vs. the Dow at 20 and the S&P 500 at 23.5. In order for Intel to increase in price one of three thing has to happen:
1. The market has to be awarded a higher overall PE, taking Intel with it.
2. Intel's fundamentals have to change in relation to the rest of the market.
3. The PERCEPTION of Intels fundamentals has to change in relation to the overall market.
I think number 3 is the most probable. 1998 earnings have been revised down by virtually every analyst, Intel has NOT given any guidance, to my knowledge, to earn these revisions for 1998.
I don't know if the expectations have hit bottom in the sentiment towards tech stocks and Intel, but it may have.
John
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