A Painful Observation on Intel

[Rado]

Imagine an uncommented-upon news item that said something like, "Hollywood won't make any movies next year, will focus on marketing old ones." Or picture this: "Earth to spin other direction for year."

Well, that's the rough equivalent of a small news item last week that Morgan Stanley Dean Witter semiconductor analyst Mark Edelstone not only had lowered his ratings and earnings estimates for Intel (INTC:Nasdaq - news - boards) for 2000 and 2001. More shocking -- doubly so for the deadening silence that followed it -- is that Edelstone forecasts that Intel will earn less in 2001 than in 2000.

The rest of Wall Street still forecasts that Intel will grow per-share earnings by 3% in 2001 to $1.73. But Edelstone now sees Intel earning $1.68 this year, in line with the rest of the Street and an easy number to hit because of Intel's guidance. He thinks EPS will drop to $1.65 in 2001.


Read the rest over here: E Forums

 

[Midnight Rambler]

That guy is an idiot, and many brokerages refuted what he said. Backed up by the market too, on a horrid day for the NASDAQ, Intel was one of the few in the positive (AMD was too BTW). He rarely even follows Intel. In fact, a lot of his comments in his report seemed the exact opposite to information provided by Intel in an official newsrelease last week. Now that fair disclosure of info is being enforced, analysts like this guy know no more, and in many cases less, than the public. For example, he cites how the P4 is going to be a lot more expensive because of die size. True it's larger, but in Intel's official release of info last week, they said the increased cost due to a larger die size would be offset by increased cost savings in packaging. That analyst also seems to have missed that Intel has moved up the ramp of P4 to have it their mainstream CPU by end of 2001.

As for the potential for Intel to earn less in 2001 than in 2000, that's very likely to happen. Not only for Intel, but also IBM, Cisco, Dell, GE, etc. etc. And yes, AMD too.

 

[X14]

I'm not buying any of that analyst nonsense. When the buyers start coming back to the market, you can bet the institutions will be buying INTC at these levels.

INTC is trading at a trailing P/E of 22 right now. Compared to the high P/E techs tradind at P/Es over 100, 200, and even higher, INTC is a steal.

I'm not waiting for the instituions to get back in, I stepped up to the plate and bought 3,800 shs of INTC this moring. I expect it to hit $50 by year end easily, and get back to $75 next year.

Anybody that has followed the semiconductor industry knows that it goes through boom and bust cycles like clock work. The time to sell semis is when they are high and time to buy is when they are low. Sounds easy but anyone that follows the market knows that it's much harder to do than it sounds. Human nature causes most people to buy when stocks are high and sell when stocks are low.

Analysts are notorious for upgrading stocks when they are trading high and downgrading stocks when they are low. It's the "tell me what I don't already know syndrome". Now is the time to buy INTC, not sell.

If you looks back at a 10 year chart on INTC, the stock has ALWAYS come back with to make new all time highs when it gets near the low end of its trading range.

At $39 (closed today at 40 15/16, 41 1/2 AH), INTC is only up about 10% over the last 52 weeks. Historically, the next 52 weeks have experienced exceptional gains. I would not be surprised at all to see 100% gains in INTC in the next 52 weeks. Sounds optimistic but if you go back and look at INTC, 100% gains in 52 weeks is not all that uncommon for INTC.

A 100% increase in INTC from $40 would only be $80, just $5 higher than INTC was in late summer (2 1/2 months ago).

My only problem is I have a fairly new AMD TB system that I just built and I feel like I'm betraying INTC. I guess I'll just have to buy a P4 when it comes out.

This is not a recommendation to buy INTC. Do your own due diligence when investing in any stock.