The two recent downgrades on INTC are unwarranted!
Posted by Jack Haddad on January 7, 2008 at 9:54 am
INTC dropped nearly 15% in the last three trading days last week. Contrary to what Bank of America and Goldman analysts think, microprocessor inventories for both INTC and AMD have dropped to recent lows with stable pricing, and drive demand. Pricing has been very good for many months, and panel availability especially on the monitor/notebook side has been very tight longer then they companies had expected. This is true even with panel manufacturers operating at full capacity, and even DRAM commentary from both manufacturers and dealers suggest that unit demand was good this Q4 vs last year rather oversupply was the culprit behind the DRAM debacle.
The argument for owning INTC at these levels is even more compelling. INTC is trading at levels commensurate with those of a year ago when PC sales had fallen to the bottom of a multi-year cycle at below 10% Y/Y growth, AMD appeared to have trumped INTC with its Barcelona product, and INTC margins were on the wane towards a sub 40% level. Today INTC is gaining back the market share lost to AMD over the last two years. We believe this gain will only accelerate as AMD’s financial woes and uncertain future becomes more evident. INTC arguably will be able to extract better terms and pricing from OEMs, which should improve margins, earnings, and even offers the potential for multiple improvement.
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I’m afraid you are blinded by having a position which seems obviously quite huge. The whole sector is being hammered, there is something not right developing in the computer segment. Get out on the first rally.
Andre,
I don’t care what the sector does…I follow a qauntitative approcach to trading coupled with a complex option strategy (covered call option writing). I urge to keep track of my record. you won’t be dissapointed.