Hi Sonny: Coming Up: Special report on Intel I have been promising:
Have been keeping an eye on the thread as best I can during the last few days....too busy to post with all this great action going on...totally awesome.
Actually, I have been wanting to post a potentially important, (to this thread) and daring editorial I wrote last week for a Financial pub I contribute to. In deference to my publisher, I had to respectfully wait until this item was published before I could post here. Was actually written when Intel was under $80.
I see you had quite an exchange with Dr. K on Sunday night. Seems like main Intel thread is gravitating more towards off Topic also!!!
I even got yelled at the other day on another thread for answering a request of another poster - can you believe it! I'll have some comments to make re this when I have time later this week perhaps.
Anyhow here's the Editorial almost in it's entirety. Now maybe you'll understand why I haven't had time to post, trying to get this peice right among other things.
INTC is doing a sterling job at negating the negative structure of the last few months. The shorts must be getting killed. I wonder if the other positive influence has anything to do with what you are about to read below:
1998: THE YEAR OF THE TITANS!
January 1998 ended on a strong note, becoming the month during which the over-hyped Asian problems began to wane and then paled into apparent insignificance as they were suddenly and dramatically eclipsed by the surprising events unfolding in Washington.
In spite of all of this, my mind has remained focused on the continuing dynamic changes occurring in the Global Economy that have been brought about in part by this Asian angst.
In particular, I am referring to the accelerating trend of two very dominant themes. First: The tremendous drop in interest rates occurring during a period, when cyclically, rates are often more prone to rise. And second: The unbelievable (longer term) bargains that have emerged as a consequence of all of the Asian turmoil due to the coincident stock price collapse of many blue chip issues over there.
It's now clear, the combination of sharp declines in the cost of money, combined with near zero inflation and surprisingly robust profit picture is generating premium stock values and therefore supreme currency levels in the U.S. and Europe. This recipe in the making, combined with a super strong U.S. Dollar could become the potent elixir for a "Titanic Like Era of Global Takeover Activity".
I've been itching to write about this all month, but the markets had already beaten me to it, having just announced some of the biggest corporate deals the World has ever known. Could this be the beginning of something that is really far bigger than us all, or is it some kind of major market top blowoff?
As long as these favorable economic conditions continue to prevail as they have in recent years, we may see takeover activity on such an immense scale that it will probably lead to awesome new records in the year(s) ahead. Why? Because "Global Dominance in the 21st Century" is at stake and it is agenda one for now. And the heavyweights know it. They know that the largest and strongest alliances are the ones that will own the future. This mindset could pave the way to an unfolding takeover mania in which some of the biggest corporate battles in history may be played out in a modern day "Clash of the Titans" on a totally unprecedented and dramatic scale.
For this reason, I have been utterly consumed over the past month, not so much with perfunctory events in Washington, but more realistically with trying to figure out what's on the minds of the World's Top Chief Executive Officers. With 23 months left to go: What will they be plotting? How will these Chieftains surprise us, as they begin to map out their strategies on how to dominate their respective fields at the dawn of the 21st Century?
The continuing fall in interest rates has added great currency to the war chests of these Global behemoths and has given them new power and money to burn as they scour the World in pursuit of undervalued and strategic assets. I sense a kind of latent fear prevalent among many CEO's who simply cannot afford to miss out on such screaming opportunities, which if not acted upon swiftly and decisively could become their own nightmare scenario of increased competition. Their very future is at stake. The air of urgency is intense, as the window of opportunity could slam shut prematurely at any time, should any of the pre-mentioned positives suddenly turn negative, such as rising rates or a falling dollar. What will this mean for investors and how will it all affect our daily lives? There could be huge positives, such as lower prices for goods and services and at the same time help to inure a strong foundation for the new economy and the markets of our future.
So when will the next major coup unfold? We've already seen the largest computer and pharmaceutical mergers in history. Now, what do we do for an encore? Maybe, just maybe, the biggest merger of all time is just around the corner. In my view, one of the prime targets out there on the mergers and acquisitions landscape is Intel, (INTC at $80). Why Intel? Because, it is uniquely poised to become a major economic engine of the 21st Century. It is a fabulously successful and profitable enterprise that has eight consecutive years of record breaking growth to its credit and during those years, has all but totally dominated the market for computer processors of this era. Together with Microsoft, Intel has been the undisputed driving force behind the economic miracle of the 1990's thus far.
It is my view that the Titanic engines of the 20th Century which have powered growth so successfully, are now in a conundrum on how to maintain that legacy going into the next Millenium. They may still own great franchises for now. How then, can they buy insurance by expanding or multiplying their existing monopolies, so as to capitalize on and dovetail into the next generation of exponential growth. And how can they successfully integrate their core 20th Century businesses, while still adding significant value and appeal?
Who are the prime contenders? Who will be using chips of all shapes and sizes to enhance their low-tech products and convert them into the high tech wonders and gadgets envisioned for the years ahead?
Let's name but a few: General Motors, General Electric, Ford, AT&T, Boeing, perhaps even Sony. Not forgetting IBM, of course, where existing synergies and intellectual capital could create a multiplier effect beyond imagination. The bottom line is all of these companies are going to be in need of ever more powerful processors on a massively increasing scale in the foreseeable future. Therefore, it would appear to make a lot of sense for one of these titans to merge with a company like Intel.
One thing is for sure. The future is not cast in stone. No Corporation, large or small can be immunized against becoming a Titanic of the 21st Century. It nearly happened to IBM in this decade and Digital Equipment in the last. One of the most demanding requisites for any company to have to live up to, has to be, to invent, innovate or at least be at the crest of development on the next wave of Global growth and innovation to insure its very future. Case in point, one of the most successful companies ever, Microsoft, failed to fully appreciate or foresee the enormous potential of the Internet, until its evolution was already well under way. Even Bill Gates admits that if you'd told him in the early 90's that companies would be including their websites as part of their TV commercials, he would have laughed back then. Now, he is able to smile today, because he so deftly managed to re-invent Microsoft by redirecting its focus toward a total Internet revolution soon after he realized the genie was out of the bottle. Just goes to show, no-one has a monopoly on the future, but perhaps by merging with Intel, someone may just own it, at least for a while.
Last month, I suggested 1998 would be a turbulent year, but again with a positive market bias. So far the action has been just that. January's early weak action, followed by this very strong close at month's end, has fooled some of the smartest players in the game. I believe it bodes very well for the market overall this year, but implies that our resolve will be tested sometime during the months ahead. For reasons mentioned above, I think 1998 will be quite a year. Don't underestimate the Millenium's powerful influence. It has surprised already and I believe it will continue to do so. One of those surprises may also include the Gold market. I did state that we would in all likely-hood witness a furious rally following a retest of the recent lows at $280. Whilst the rally so far has been somewhat more subdued than furious with a 10% rally, I still would not rule out a stronger Gold move sooner or later.
Let me know what you think
Thanks and rgds
Wiz |
