All,
This morning Intel is at 65 7/8. Because I regard this post as potentially marking a turning point, and because the Intel thread has become so impossible to read through, I wanted to re-post this message here so that it would not be lost in the clutter.
Good morning Stephen and All,
It is difficult for me to answer your questions, "is it as bad as it looks?". From my standpoint, relative to Intel's future the answer to your question is No... However, I believe that in times like these, Intel's future, beyond the next 6 weeks, means little. There is a frenzy now of "stock market irrationality". Semiconductor Analysts are playing to investor fears and are "piling onto" Intel. Never mind that Kurlak's fundamental reasons for downgrading Intel have yet to play out. Never mind that the 6 month delay in Merced's availability will have little impact on Intel for at least another next two years, or that the FTC is recommending a suit against the company and Intel hasn't even had a chance to defend itself.
Yes, for sure, we are experiencing is a series of questionable and bad news items, all coming at once.
Has anything really changed fundamentally though from yesterday morning when INTC's stock began to move up more than a point to above 70? Have analysts taken notice that Intel's stock is already down significantly from its high?... No. The only thing that happened yesterday was that H & Q's analyst downgraded Intel's Q2 numbers by $.04 cents. More importantly he actually mis-guessed that Intel would pre-announce yesterday afternoon, (having worked for Intel previously, he probably knew that their weekly reviews occur on Tuesdays and assumed that it would come yesterday if it were to come this week).
Despite the fact that Intel never did pre-announce yesterday, and after the market closed Intel had to come out with a statement saying that they were not planning to make any statements that day, and that the previous guidance that the company had given is still in effect, Intel's stock plummeted more than 7% from its morning high. The damage had already been done. Analysts were now jumping on the bandwagon. No one wanted to be the last to downgrade. And because there is not an effective Investor Relations Department in place at Intel, extensive damage was done.
Certainly these are not good times for Intel. Admittedly, I and others here have missed the impact on Intel from the slowdown in the Asian economy, and the fact that the FTC was crazy enough to sue Intel, or that the Merced chip would be delayed six months. But in my humble opinion, these are not reasons enough to take a stock of this quality down by more than 37% from its previous high.
Perhaps six months from now I will be proven wrong, but I believe that Intel's poor stock performance is to a large part a commentary on the today's analysts inability to put things into a proper perspective. I read no reports where the main focus is on Intel's bright long term future. So Stephen, when you ask me, "why invest in Intel now ?" I answer you by saying... If you believe, as I do, that Intel is the best company on earth, a leader is an industry that is essential for worldwide economic growth, and that this bad period shall also pass, then you invest in Intel. As for your question, do you invest now? I can't answer. I only claim to be good at analyzing Intel's fundamentals. I seem to be unable, especially lately, to analyze the irrationality of Analysts and how the stock market will react to them.
Jules |
