Paul, thread, pretty good article by James Cramer on the happenins' last Friday when Intel stock got trashed along with Dell. He was bullish Intel at the start of the day.
I came in long Intel
on Friday. We had heard the Intel
presentation earlier in the week, had
dinner with Intel and had checked in with
virtually every Intel analyst all week to be
sure that Intel wasn't going to be hurt by the
low-end price war.
Got reinforced by Edelstone:
On Thursday, Mark Edelstone, the
incredibly influential chip analyst from
Morgan Stanley Dean Witter squawked
that he liked Intel very much at the $131
level, which juiced the stock -- and us --
into taking some more Intel.
We figured that Edelstone, a numbers guy,
had a good take on how the first quarter is
cooking. Edelstone's comments were
verified repeatedly during multiple
sessions with other tech companies at the
important Goldman conference.
The rest is all black hole effect from Dell (Dan Miles actually), although Cramer was buying Intel again near the close:
thestreet.com
Following a
Bouncing Ball in a
Game That Never
Ends
By James J. Cramer
2/14/99 12:18 AM ET
The sheer number of variables that go into
a stock's price move defies the
odds-makers daily.
Let's take a day's worth of Intel
(INTC:Nasdaq) trading. I came in long Intel
on Friday. We had heard the Intel
presentation earlier in the week, had
dinner with Intel and had checked in with
virtually every Intel analyst all week to be
sure that Intel wasn't going to be hurt by the
low-end price war.
On Thursday, Mark Edelstone, the
incredibly influential chip analyst from
Morgan Stanley Dean Witter squawked
that he liked Intel very much at the $131
level, which juiced the stock -- and us --
into taking some more Intel.
We figured that Edelstone, a numbers guy,
had a good take on how the first quarter is
cooking. Edelstone's comments were
verified repeatedly during multiple
sessions with other tech companies at the
important Goldman conference.
Then the world turned upside down Friday.
A First Call note, put up overnight, from
Dan Niles at Robertson Stephens,
called Dell's (DELL:Nasdaq) revenue
numbers into question.
No matter that Niles hasn't been a bull on
Dell, the computer company reports this
week, and it was too close to that report
date to refute Niles' call with any authority.
The company can't announce the day
before it is due to report just to try to deal
with Niles' call (although I remember before
Cabletron (CS:NYSE) became an
also-ran, it did this a couple of times when
the bears had it on the ropes.)
So the silence was defeaning. The stock
tumbled from the get-go. Of course, if Dell
goes down, so goes Intel. It does so
regardless of what it said just the other
day.
I tried to off-load the Intel I had bought on
Edelstone's call at the opening. The start of
the market on Friday was weird. As it was
clear that Dell would color everything, the
tech world was surprisingly upbeat at 9:30.
In fact, the first thing that happened was
that Microsoft (MSFT:Nasdaq) rallied. I
sold some Intel but then kept some back
because of the Soft rally.
The rally in Mister Softee was incredibly
visible at 9:35 a.m. as the 163 bid kept
growing and then people started taking
163.25 stock. I know I started screaming to
Jeff Berkowitz, my partner, "What am I
missing? What am I missing?" as if I were
going left when everyone was going right. I
stopped selling everything else I was trying
to kick out.
"Did the government screw up?" I
continued. "I thought the government was
starting to do better, looking like a win for
the Feds. Maybe we are wrong on this Dell
impact call. Maybe it's not that important."
Finally, Jeff shut me up with " 'Soft is
wrong. 'Soft's a false tell. We gotta go
some 'Soft and 'Tel."
It shook me out of my reverie, and I
immediately blasted out of my trading
stock in both of them. 'Soft kept climbing
for another five or ten minutes, and then it
and Intel began their long dives. They
never reversed course for the rest of the
day.
The funny thing about a potential Dell
shortfall is that a slowdown in revenues
literally impacts just about every aspect of
the personal-computer business -- that' s
how big Dell is now.
So at what level do you buy back your Intel
if at all, especially if you believe, as I do,
that all of the negatives about Dell are
probably overblown at this point ?
One by one, the adherents of Dell
"reiterated" their buys, but to no avail. So
throughout the midday, it dragged along
Intel with it, right through the impeachment
proceedings. Then at 2 p.m. word swept
the Street that Tom Kurlak had quit Merrill
to go to Tiger, the giant hedge fund. There
was a time when Kurlak's name was
synonymous with Intel, and I would have
blown out a ton of the chipmaker's stock if
we had still been in that mode.
But Tom missed this move -- weirdly he will
be known by newbies as the man who
missed this move, as opposed to the man I
know who pioneered the notion that Intel
was a great manufacturer, that
transcended the simple notion of
boom-bust p.c. technology. Oddly, the man
who made Intel a mainstream core holding
had no impact, or even a ripple, on the
market now that he is moving to my side of
the Street.
As Intel headed to $126 I bought some of
my stock back, on the assumption that
cooler heads would prevail Tuesday. I
recall that even in the horrendous selling
earlier in the week Intel held the $122 level,
and it was still above that. I would have
bought more, but I am just plain scared of
these mirror NDX mutual funds that
accentuate the direction of the NDX. Intel
is such a huge part of the NDX, that it
would be suicidal on a down day now to go
in at any time other than 3:59, when the
NDX is down, because these manipulators
will just nail you with their selling.
There was also no hurry because Intel is
now such a huge part of the S&P 500 that
you have to worry about sell programs
taking money out of stock and into bonds --
especially with bonds in a freefall as they
were on Friday. Not surprisingly, as Dell
kept going lower and NDX funds did their
dirty deeds, the close of Intel was
downright nasty. It did not matter that Intel,
in this very week, had spoken and spoken
positively. In the end, this stock was held
hostage to much larger variables, and on
Friday those variables were all flashing
negative.
Fortunately, with Intel, we won't have to wait
long to see if we can buy again. Both Dell
and Hewlett-Packard (HWP:NYSE)
report this week, and these stocks will set
the chipmaker's equity in motion again.
That's what makes this game so great: It
never ends.
James J. Cramer is manager of a hedge
fund and co-founder of TheStreet.com.
At the time of publication, the fund was
long Dell, Hewlett-Packard, Microsoft
and Intel, although positions can change
at any time. Under no circumstances
does the information in this column
represent a recommendation to buy or
sell stocks. Cramer's writings provide
insights into the dynamics of money
management and are not a solicitation
for transactions. While he cannot provide
investment advice or recommendations,
he invites you to comment on his column
by sending an email to
letters@thestreet.com.
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