SAF:
MB and I are soul mates with respect to the coming tech wreck. We've both been writing about the avalanche of evidence that points to this for a couple of years.
The fact that we are in a mania has distorted the normal propensity for the stock market to discount future problems and this makes it much more difficult to call timing on the coming tech market implosion.
I have a stronger negative bias on Intel and believe that it will lead this market to the downside. (Please note nickname in reading this statement.) Intel has lost very consequential market share in the middle (Pentium) ground to the K6. This has occurred very rapidly (less than 18 months) and continues. At the top of the market, their P2 is selling poorly, especially given the "farm bet" that was made on this chip. (recall INTC's giant sales projections when it was introduced). Intel's inventories on the P2 are massive and more than worrisome. At the bottom of the spectrum, the Celeron bombed and is back in house for a revamping. Price cuts have been frequent, deep, and INEFFECTIVE. INTC was brilliantly bagged by DEC last year and saddled with a good, but (in the current market) useless micro, along with its attendant expensive production capacity. I hardly need to mention the Justice Dept woes. Its balance sheet is deteriorating, and at a rate that surprises even a nasty bear like me.
The big problem for INTC is that the market it addresses is saturated. Even worse, serious competition has evolved at exactly the wrong time.
If one examines Intel's situation critically, the only conclusion that can be drawn is that Intel must downsize both quickly and dramatically if it hopes to remain financially strong, and it must also move into other fields while it can,....... something I personally believe it is incapable of doing, given current circumstances. Being big in a shrinking market creates problems in a hurry.
Intel's recent quarterly reports spell out the accelerating deterioration in billboard sized letters. The stock is over-valued beyond description on any valid basis. The only thing that keeps it in the stratosphere is its past "darling" status and the assinine "rebound" theory. There will be no rebound. In fact, conditions will continue to deteriorate. I'll happily match facts with any analyst who suggests otherwise and do so with glee. INTC is in the top five on my "hit parade".
MB's track record in calling timing on these things is infinitely better than mine!
Best, Earlie
|
