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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Dan3 who wrote (139506)	7/17/2001 10:30:46 PM
From: ild	Read Replies (1) \| Respond to of 186894

The Meehan Notes This Is Not Your Father's Intel By Bill Meehan Special to TheStreet.com 7/17/01 1:58 PM ET URL: thestreet.com "Intel Inside" has been branded into consumer and investor minds to the tune of hundreds of millions of dollars. But it now appears Intel's(INTC:Nasdaq) stock price has been kept afloat more by its ad campaign and co-op spending than by the performance of the company, which at one time had a virtual monopoly. It's now rapidly losing market share. Aggressive pricing of new chips is a thing of the past, as is the company's one-time reputation for excellence in design and execution. This is not your father's Intel. Intel earned 87 cents a share in 1998 and, based on current Thomson Financial/First Call consensus, is expected to earn a whopping 76 cents next year. For this deterioration, should one feel comfortable paying 37 times what might very well be an earnings forecast that's overly optimistic? The company once enjoyed a reputation of being one of the best-managed tech companies, but that hasn't been the case during the past several years. Repeated delays, poor design and problems manufacturing chips in mass quantities have now been compounded by an apparently less-than-forthright dialogue with analysts and investors. Repeated comments to the effect of "next quarter will be much better" in the face of a PC biz that was clearly in retreat has left management looking far less than straightforward. It will certainly be interesting to hear what they have to say this evening. (I'll refrain from quoting some current and ex-Intel employees on their less-than-positive takes.) Of course, Intel has successfully reinvented itself before (with the help of IBM's(IBM:NYSE) money, abandoning memory for microprocessors), so the question is, can they do it again? They've certainly invested billions of dollars into other promising technologies. However, one has to question how much is too much to pay for a company with a growth outlook that's so uncertain. In my opinion, the current management team is a far cry from the one Andy Grove oversaw and was able to use to deftly revolutionize the industry. I could be wrong, but the charts also show a stock in trouble, and there's a lot more than slack demand, overcapacity and inventory that's impairing earnings visibility. The key question for me is, how is the company going to generate enough growth to justify a still-lofty multiple? -------------------------------------------------------------------------------- Bill Meehan is the chief market analyst for Cantor Fitzgerald, a Manhattan-based institutional trading and research firm, and writes daily for the Cantor Morning News. Prior to that, he was a market analyst for Prudential Securities. At time of publication, Meehan was long Intel puts, although holdings can change at any time. He appreciates your feedback at commentarymail@thestreet.com. --------------------------------------------------------------------------------