Thoughts on recent INTC stock dive

destey

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Jan 17, 2008
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I'm thinking the US economy's worries are overstated and things aren't really as bad as it sounds on the evening news. Meaning IMO the market is overcorrected and this is a good buying opportunity.

With Intel coming off one of its best quarters ever, and its stock being down huge from its 28 high, is this an attractive price (19.44 as I write this)?

I should disclaim that I'm long on Intel and currently own boatload of their stock (not at a profit right now though!!!). Time to average down?
 

pm

Elite Member Mobile Devices
Jan 25, 2000
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Why would you think the economic worries are overstated? Commodities have risen substantially in price, energy prices are extremely high, overall core inflation is on the rise. Based on job reports, housing starts, and consumer confidence numbers, we appear to be heading into a recession but the dollar is weak (which hurts inflation due to imports) and commodities are very high (which hurts inflation) and the Fed, who's primary purpose in life is to keep inflation under control, can't lower rates to stimulate the economy because of inflationary risks... and if they raise them, the economy will totally tank - so they can't do much more than talk, and try steer clear of this issue by talking about "economic stimulation packages". I see us walking a narrow line with a chasm to each side (inflation on one side and recession on the other) and not a lot of good options. So I don't think the worries are at all overstated. It might work out ok, or it might all unravel. If the weak dollar stimulates exports (which it has been) and this offsets manufacturer losses due to cutbacks in production for the US market... things might all work out. But I don't think the concern is overstated at all.

As far as Intel, I work for the company so I am obviously quite bullish, about the company, our product line and our strategy. I'd also echo Paul Otellini's comments that "fully 75% of our revenues come from outside the US" and that "economists see little evidence of a looming global recession".
 

rchiu

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Jun 8, 2002
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I think Intel is over sold. But the thing is the overall market is not looking good and I feel like there is a correction coming up (maybe happening right now). So even tho Intel is cheap, overall market may drag it down further. I am waiting on the sideline right now.
 

destey

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Jan 17, 2008
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Originally posted by: pm

As far as Intel, I work for the company so I am obviously quite bullish, about the company, our product line and our strategy. I'd also echo Paul Otellini's comments that "fully 75% of our revenues come from outside the US" and that "economists see little evidence of a looming global recession".

Thanks for your insightful comments. I wish they weren't so right on the money as I think they are.

With Intel being to some degree isolated from a US recession, what's your opinion as to why the stock taken a bigger dive than the market in general?


best wishes,
D
 

destey

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Jan 17, 2008
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Originally posted by: rchiu
I think Intel is over sold. But the thing is the overall market is not looking good and I feel like there is a correction coming up (maybe happening right now). So even tho Intel is cheap, overall market may drag it down further. I am waiting on the sideline right now.

If you have confidence in the markets going down, you always have the ultrashort funds
 

madh83

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Jan 14, 2007
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Originally posted by: destey
Originally posted by: pm

As far as Intel, I work for the company so I am obviously quite bullish, about the company, our product line and our strategy. I'd also echo Paul Otellini's comments that "fully 75% of our revenues come from outside the US" and that "economists see little evidence of a looming global recession".

Thanks for your insightful comments. I wish they weren't so right on the money as I think they are.

With Intel being to some degree isolated from a US recession, what's your opinion as to why the stock taken a bigger dive than the market in general?


best wishes,
D

This gets thrown around, but it pretty much explains what happened. People bought it for the same reason you're stating, to guard against a bad market. A lot of them were probably expecting outperformance from Intel given the high margins and good news from them. When they pretty much just matched expectations (.38 EPS vs expected of .40 EPS or -5%), people paniced a bit, so this is probably a low level for the stock. However, there are considerable problems with the economy in general, which tends to drive the entire market down, taking intc with it. If you already own it, I'd just hold on to it till it comes back up, or if something goes fundamentally wrong with intel then sell.
 

pm

Elite Member Mobile Devices
Jan 25, 2000
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With Intel being to some degree isolated from a US recession, what's your opinion as to why the stock taken a bigger dive than the market in general?

I thought it was a bad day to deliver bad news. With the Citibank loss, and the inflation numbers, even companies giving good news (for example Apple's MacWorld) got burned. And then Intel missed it's earning numbers and delivered a not-so-exciting Q1 forecast and the whole market got burned, but Intel took the brunt of it because it's considered an industry "bellweather" that forecasts where the entire high-tech industry is headed. I think the market was looking for Intel to deliver a great Q4 - which it pretty much did - and then be reasonably upbeat in the forecast, but the forecast was not particularly upbeat and the market over-reacted.

That said, while there are no signs of a worldwide recession, commodity prices worldwide are high, particularly energy. High commodity prices beget higher manufacturing costs, higher manufacturing costs beget higher consumer prices which in turn lead to wage pressures. While the rest of the world may be merrily chugging along, according to standard macroeconomic modelling, inflationary pressures should be mounting worldwide.
 

Midnight Rambler

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Oct 9, 1999
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INTC is waaaay oversold as others have noted. They didn't miss THEIR estimates/guidance, they missed the Street's "expectations", which weren't in line to begin with. Despite all of their guidance, and they issue a lot of it, the Street refused to budge on its numbers before the report. Despite the 2nd best-ever financial report in the company's history. Despite a record number of units shipped. Despite a massive increase in product margins. Despite their huge lead in the transition to the next industry microarchitecture. Despite a return to much better EPS. Despite a crazy P/E. Despite ... well, darn near anything they do ! Of course it also didn't help that their rookie CFO made a mistake in taking a charge against the EPS that could have been buried somewhere else (legally).

As noted, INTC is considered a bellweather stock, a DOW "dog" (not in the negative sense). With that comes a lot of pressure, not to mention a lot of "churn" as fund managers "play" with INTC shares (and shares of the other 29 DOW dogs) a lot more than with stocks which don't make up the index.

In sum, INTC is not for short term investors. If you're in it for the long haul though, the stock is currently "on sale". How long this lasts, who knows. If you want a decent position in INTC you might consider spreading your share purchases out in order to dollar cost average, or, buy a few shares of INTC O.T.C. then buy more via their DRIP program.
 

destey

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Jan 17, 2008
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Originally posted by: madh83
A lot of them were probably expecting outperformance from Intel given the high margins and good news from them. When they pretty much just matched expectations (.38 EPS vs expected of .40 EPS or -5%), people paniced a bit, so this is probably a low level for the stock.

Is it accurate to say AMD sandbagged and intel aimed high and came up short? Usually there's not much worth reading on the yahoo finance boards, but this letter to Otellini seems to ring pretty true.
 

Phynaz

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Mar 13, 2006
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My strategy with Intel has worked the last couple of years.

< $20 continue to buy.
$20 - $24 Hold
> $24 Sell
 

CTho9305

Elite Member
Jul 26, 2000
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Originally posted by: Nemesis 1
It would be nice to see Intel drop another 1or 2 bucks.

Now I'm really confused. You want 60% margins for Intel, but a low stock price. If you currently held the stock, you'd want a high price. If you didn't hold the stock, you'd want awful margins so you can buy it cheap until margins recover.
 

madh83

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Jan 14, 2007
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Originally posted by: destey
Originally posted by: madh83
A lot of them were probably expecting outperformance from Intel given the high margins and good news from them. When they pretty much just matched expectations (.38 EPS vs expected of .40 EPS or -5%), people paniced a bit, so this is probably a low level for the stock.

Is it accurate to say AMD sandbagged and intel aimed high and came up short? Usually there's not much worth reading on the yahoo finance boards, but this letter to Otellini seems to ring pretty true.

Not really sure what sandbagging means, the expected earnings come from the analysts covering intel though, not intel themselves. In a bull market where the economy was doing well, yesterday's news probably would have been a small blip on their stock price.

I think the way the CEO and CFO present themselves may have a little bit to do with the stock price. However, in the long term it's the earnings that drive the stock price. I'd much rather have a CEO who was competent and bad at dealing with the press, than one who constantly makes bad decisions and good with the press. And the ceo seems to be doing a good job of running intel, it's hard to complain about the actual growth they've had.
 

hans007

Lifer
Feb 1, 2000
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intel is way oversold.

then again with the idea that there could be a recession , one of the first things companies and people do is stop capital spending. i mean computers for years have already lacked a "killer app" so i figure people would cut back on buying new computers if there was an economic downturn. that said, $18 ish is a little too low.

the DOW jones btw is down 2200 points since mid october, so 15%....

intel is down about 30% since then. i think amd is down like 50% in that same span even with todays gains.
 

wwswimming

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Jan 21, 2006
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Originally posted by: destey
I'm thinking the US economy's worries are overstated and things aren't really as bad as it sounds on the evening news. Meaning IMO the market is overcorrected and this is a good buying opportunity.

With Intel coming off one of its best quarters ever, and its stock being down huge from its 28 high, is this an attractive price (19.44 as I write this)?

I should disclaim that I'm long on Intel and currently own boatload of their stock (not at a profit right now though!!!). Time to average down?

http://quote.yahoo.com/q/bc?s=INTC&t=my

just to see what you guys are talking about.

as far as "US economy's worries are overstated", one person
that has helped me understand the alphabet soup of mortgage-
backed securities is John Mauldin at
http://www.investorsinsight.com/

over time he has tended to be very bullish, but not recently.
as he explains, when the banks have to take $250 billion in
losses back on to their books, because of reserve requirements,
they have to reduce their lending by about $2.5 Trillion.

and $250 billion is a low estimate of the losses they tried to
bundle off in the form of SIV's, MBS's, CDO^2.

i always wondered why, when i bought a condo in 1997, the
bank told me i wouldn't be paying the mortgage payment to
them. it was because they were bundling my mortgage with
999 others and selling them in blocks of 1000. this allowed
them to turn around and sell another mortgage, and stay
within reserve requirements.

as far as Intel - good chips they make.
 

Viditor

Diamond Member
Oct 25, 1999
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Originally posted by: destey
Originally posted by: madh83
A lot of them were probably expecting outperformance from Intel given the high margins and good news from them. When they pretty much just matched expectations (.38 EPS vs expected of .40 EPS or -5%), people paniced a bit, so this is probably a low level for the stock.

Is it accurate to say AMD sandbagged and intel aimed high and came up short? Usually there's not much worth reading on the yahoo finance boards, but this letter to Otellini seems to ring pretty true.

Not really...
1. AMD had already dropped more than 66%, so it was already far more oversold than Intel ever was.
2. Keeping in mind that the antitrust lawsuit is finally going to court in April, it's quite possible that some of the selling is for risk aversion to any settlement or judgement.
 

destey

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Jan 17, 2008
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Originally posted by: madh83

I think the way the CEO and CFO present themselves may have a little bit to do with the stock price. However, in the long term it's the earnings that drive the stock price. I'd much rather have a CEO who was competent and bad at dealing with the press, than one who constantly makes bad decisions and good with the press. And the ceo seems to be doing a good job of running intel, it's hard to complain about the actual growth they've had.

There's a growing group of investors none too happy with the way Otellini has been running the company (from a shareholder point of view). 10 years later INTC is at the same stock price, seemingly independent of how the company is doing or the products they're producing.



 

Viditor

Diamond Member
Oct 25, 1999
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Originally posted by: destey
Originally posted by: madh83

I think the way the CEO and CFO present themselves may have a little bit to do with the stock price. However, in the long term it's the earnings that drive the stock price. I'd much rather have a CEO who was competent and bad at dealing with the press, than one who constantly makes bad decisions and good with the press. And the ceo seems to be doing a good job of running intel, it's hard to complain about the actual growth they've had.

There's a growing group of investors none too happy with the way Otellini has been running the company (from a shareholder point of view). 10 years later INTC is at the same stock price, seemingly independent of how the company is doing or the products they're producing.

I don't think they can blame that on Otellini...he's actually done a FAR better job than Craig Barrett did!
 

rchiu

Diamond Member
Jun 8, 2002
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Originally posted by: destey
Originally posted by: madh83

I think the way the CEO and CFO present themselves may have a little bit to do with the stock price. However, in the long term it's the earnings that drive the stock price. I'd much rather have a CEO who was competent and bad at dealing with the press, than one who constantly makes bad decisions and good with the press. And the ceo seems to be doing a good job of running intel, it's hard to complain about the actual growth they've had.

There's a growing group of investors none too happy with the way Otellini has been running the company (from a shareholder point of view). 10 years later INTC is at the same stock price, seemingly independent of how the company is doing or the products they're producing.

Well, intel has been in the same chip business for the last 10 years and the chip is kind of commodity. They have tried to branch into entertainment, networking, accessory and other businesses, but they have not been very successful. Keep in mind their market cap is pretty high even with their recent price drop, (at around 110 billion). Unless they come up with high growth, high margin business line, it's hard to have their already high market cap keep increasing.
 

destey

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Jan 17, 2008
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Some say its a commodity, I have a little different view. A commodity is something that doesn't matter who you buy from or when you buy it (at least in the short term). Processors are enhanced frequently and there's a lot of research that can go into which one to buy. Unlike something like sugar, with processors have a range of variations in performance.

To do a comparision of market caps:

INTC = 110B
GOOG = 188B

INTC Revenue = 38B
GOOG = 15B

I've always thought Google's business entered quickly and can also leave quickly. They're really just a search engine that's expanded. Nearly all of their revenue depends on ad revenue. I can envision a scenario where that could vanish almost overnight. Altavista was king for a while, so was yahoo. Whereas as long as there are computers they will need processors, and I don't seen AMD swapping places with Intel. It just seems that it'd be a lot harder for Intels business to dry up.
 

Idontcare

Elite Member
Oct 10, 1999
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Originally posted by: destey
I've always thought Google's business entered quickly and can also leave quickly. They're really just a search engine that's expanded. Nearly all of their revenue depends on ad revenue. I can envision a scenario where that could vanish almost overnight. Altavista was king for a while, so was yahoo. Whereas as long as there are computers they will need processors, and I don't seen AMD swapping places with Intel. It just seems that it'd be a lot harder for Intels business to dry up.

Given that they have had a behemoth like Microsoft lusting after their revenue stream and yet Google has still managed to grow like they have...I disagree they can leave as quickly as they came. Something would have to replace them.

Those other companies you listed were replaced by Google. Who is going to replace Google now? They've reached and exceeded critical mass, like Ebay. No one will ever displace Ebay now that it has reached the size and market presence it has.

Neither AMD nor Intel will have their business "dry up" but to chase after that business they will suffer continued downpressure on their ASP's. This is business and inflation taketh whatever the government didn't.
 

destey

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Jan 17, 2008
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Originally posted by: Idontcare
Given that they have had a behemoth like Microsoft lusting after their revenue stream and yet Google has still managed to grow like they have...I disagree they can leave as quickly as they came. Something would have to replace them.

I don't think it will happen, just that I can envision an scenario. Google is doing what they do well and its going to be hard for someone to replace them, but it is possible it could happen quickly. Remember 3dFX? 2000 bubble = lots of bagholders

They've reached and exceeded critical mass, like Ebay. No one will ever displace Ebay now that it has reached the size and market presence it has.

I've already all but stopped using ebay. I got ripped off, it was only $70 purchase but still. All it takes is getting ripped off once and you've nullified years of dealings. Have you seen the number of scam auctions in the last few years? I was in the market for an Evo and 1/4 the auctions I saw had to be reported as being fake... though I'm straying a little off topic here.

My point simply being it would be a lot harder to take the company out of business that has the vast marketshare of the worlds cpus. It seems easier for people to change the search location in their browser. I'd think their market capital would be swapped
 

Idontcare

Elite Member
Oct 10, 1999
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Originally posted by: destey
My point simply being it would be a lot harder to take the company out of business that has the vast marketshare of the worlds cpus. It seems easier for people to change the search location in their browser. I'd think their market capital would be swapped

(Please interpret this as cordial discussion - debating in forum posting can easily be misinterpretted as open disagreement, which is not my intent here)

I think you are mistaking the face of google (search engine for the commoner) with their revenue stream (ad engine).

The majority of websites you might end up at by way of someone else's web search engine (Ask, Yahoo, etc) are goin to display web ads that are distributed thru Google's ad business.

It's like the yellow pages as an example. Whether you (as an individual home owner/consumer) ever open a yellow pages phone book to search for a phone number or not is irrelevant to the advertisement revenue stream that the yellow book producer is going to recieve. They merely have to provide proof of their ad distribution numbers (we distribute X number of phone books to all these addresses in the city...).

Google's job of supporting their ad viewership numbers is certainly made easier by having their search engine database results (search engine for Google is just to generate data for them to leverage for maximizing their ad revenue stream, that is why it can be "free" to you and me). And no disagreement that some of their revenue is 100% dependent on the ad placements that occur directly thru their search engine itself. But that is not the sole revenue engine of Google (youtube anyone).

My argument here would be that no multi-billion dollar behemoths are going to disappear overnight from any market segment. And they won't disappear without something to replace them. Even commodity markets are dominated by massive multi-billion market cap companies.
 

LTG

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Jun 4, 2007
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Well it is an irony isn't it? You would think that you would definitely benefit in one of two ways:

1) Your Intel stock is way up because of dominating AMD

OR

2) You can get a Penryn 3.0Ghz Quad for $199 because AMD is highly competitive with Intel.

So the crazy part is neither one is true - CPU prices aren't competitive AND Intel stock is in the tank.