Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Doug M. who wrote (38335)	10/29/1997 7:24:00 PM
From: Richard Tuck	Respond to of 186894

Doug, Good analysis. I agree with you about when INTC will start growing again. I think that Windows 98, Deschutes, and the 440BX are key to Intel's success next year. They will allow INTC to differentiate the Pentium II from the earlier models and the 0.25um process will be ramped up by mid-98 (thus providing lower costs). Don't expect much from Merced until late 1999 or early 2000. That is a long ways off and a lot can change in two years time. Let's all hope that INTC ships a lot of units this Christmas or we will be lucky to maintain 80. One comment about the P/E of 15 predictions: baloney. Intel is virtually a monopoly and monopolies do not go for P/E's of 15 in a growth market unless there is a threat to the monopoly. AMD and Cyrix seem to be receding as threats and Network Computers have an uphill battle. Therefore, INTC should retain its PE of 20 at least, which means a price of 76 or 77. That does not mean that it won't go down to 70, it just means that it won't stay down there long. Richard

To: Doug M. who wrote (38335)	10/29/1997 8:16:00 PM
From: Jules B. Garfunkel	Respond to of 186894

Hello Doug, You seem to be very well informed and have stated your doubts about Intel's short term future. While I believe that you tilt more to the negative than I do, and you have ignored many of the positives that Paul, I, and many others, have discussed on this thread, I can not argue with many of your stated opinions. I think we will just have to wait to see how the quarter plays out. However, as I have stated here so many times before, Intel has such a GREAT long term future, I am not willing to be out of Intel at any time. I keep on projecting how bad I would feel if I were out of Intel when the rest of the world recognized what I see for Intel's future. (I think it was Mary who touched on this in an earlier post.) I might add, as I posted on the IBM thread earlier, I currently own Intel Calls, which I added to just this Monday. In addition, I of course maintain my long term core position. And while I sold some Calls this morning, it was only because I used the proceeds to balance my cross hedge position by buying more IBM Puts. Jules

To: Doug M. who wrote (38335)	10/29/1997 9:26:00 PM
From: Mary Cluney	Read Replies (6) \| Respond to of 186894

Doug, >>>Anyway, the main mindset with the analysts now is that Intel's ASP's are deteiroating and it appears they think they won't get too much better any time soon. This is what I would like to try and figure out. When is Intel going to be able to surprise the street and increase earnings so I can stop selling coverd calls.<<< Valuations, I am convinced, are not completely empirical processes. Much of it is irrational and a lot of it is subjective. Why should MSFT be valued at 46X earnings, QCOM 59X earnings, QUAL 233x earnings and INTC at 21X earnings? Most participants on this thread are engineers of some sort and are looking for some exotic formulae to plug the numbers into. I just don't think Tom Kurlak has any empirical basis for his valuations. He just plays the game. Of course Intel engineers are ultimately to be blamed for this sorry state of affairs. They just don't get it. They allow Tom Kurlak to play his game. They (Intel) don't give analysts the kind of guidance they should be getting. Intel must control analysts thinking. Making sure that analyst estimates are beaten quarter after quarter. That is the way the game is played. For an example of how this game is played, just read (or research if you must) how Roberto Goisueta kept Coca Cola (marketers of sugar water) valuations at such lofty levels. He took seriously analyst covering his company - making sure they understood what he wanted them to understand. If they didn't understand it, he would go to their bosses at the CEO level to make sure what needs to be understood. After all, in Intel, we are talking about one of the most successful and most profitable companies (ever) on the face of this earth. But, to be realistic, Andy Grove is going to be Andy Grove. He is never going to understand this (the control of analyst thinking). If anything, Andy would be confrontational and p*ssoff those that he needs to engage, coopt, and manipulate. (This is not to say that Andy Grove is not a great man and did great things for Intel). In this area, Andy Grove is a disaster. It is really up to Craig Barrett to step up to the plate and protect sharehorder interests. This will happen. Only I don't know when. Mary

To: Doug M. who wrote (38335)	10/29/1997 9:51:00 PM
From: Joey Smith	Respond to of 186894

Doug, I have 2 comments for your well-thought-out post: 1). You seem to emphasize that in the past Intel blew away estimates and the stock soared, and that you want Intel to keep blowing away estimates starting this quarter. IMO, Intel is currently trying to manage Wall Street expectations by being ultra-conservative. We saw that in the CC and we have seen it the past few months with basically a dearth of "good news" coming from Intel. Intel is being hush-hush intentionally I believe. They don't want expectations to get out-of-hand especially in this critical and difficult PII transition. I, for one, will be happy if Intel just meets estimates this quarter and there is a very good chance they will. The last thing Intel wants to do is miss estimates 3 qtrs in a row, and therefore they have lowered expectations to make sure they don't. With the lowered expectations, the stock will do fine come Jan. if they just meet estimates, so I wouldn't worry about "blowing away estimates". 2). I think the 1998 estimates are too low (which will turn out to be a good thing). I have read the most recent analyst reports from Kurlack/Lazlo who are saying $3.50 a share next year and their arguments are weak. They basically are saying about the same or lower ASPs, not enough unit increase to offset this, higher capital costs. They make no/little mention of .25m cost reductions, PII earnings expansion, mobile product earnings expansion, server/workstation growth, etc. No one can predict the future, but if the marketing research reports about PC/microprocessor growth rates for 1998/1999/2000 are correct, then Intel is VERY CHEAP at $80 right now. good luck, joey

To: Doug M. who wrote (38335)	10/29/1997 9:55:00 PM
From: greenspirit	Respond to of 186894

Doug, I seem to remember Intel stated about a year ago the worldwide home PC market represented about 10% of sales, and the U.S. home PC market represented about 5% of sales. I posted this about 3 days ago, and asked if anyone remembered otherwise. As of yet I have not seen any conflicting views. The reason I remember it so clearly was because I was suprised then how little the retail market effected Intel's bottom line. This may have changed. Perhaps John Hull would be allowed to comment here? Regards, Michael