Wall Street Disappointed By INTC

[Mark Heide]

After the market close today, Intel announced it's earnings at $0.10 per share. Wall Street expected $0.13. Intel's report was not upbeat for the industry. With that being said, what affect will this have on other technology stocks tomorrow?

Since, the DOW rallied to almost a 1000 point increase in the past four days will the market pull back some of the gains? Furthermore, do you think this is a real rally or a bull rally? Why?

Tomorrow, IBM will be reporting it's earnings. There are some questions as to the growth of their hardware division and services. What's next?

Here's a link to an IBM story for today:

http://www.quicken.com/investments/news/story/?story=NewsStory/dowJones/20021015/ON200210151433000923.var&p=IBM

Good Luck

Mark

[Trefo]

Definitely will be a pullback tomorrow as stocks are all locking down as we speak before tommorrow's open and probably will give back some of our gains, and profit taking will take shape as most investors will be worried about intc's negative report. End of week Nasdaq will be just above 1200 and Dow will give back around 500.

[PokerBabe(aka)]

Hi Mark- MarketBabe was a little disappointed in the 10c vs. 13c number for INTC. Sure, this is a "reason" to take profits after the nice run we have had recently. I am encouraged by the "good" earnings reports, however, and firmly believe that pullbacks should be used as buying ops here. Buy Low and LGPG, Babe /forums/images/icons/wink.gif

[Wildbill]

I wouldn't be surprised if the profit taking was very short-lived. The bearish sentiment hit so high last week that I think there might be quite a lot of money still waiting to jump in. A little pull back wouldn't be out of order, but I just don't think there are a lot of people that are willing to take a risk of this being another bear rally. The market has gotten so deflated that the risk/reward of going short just isn't there, even with the big 4 day rally. Besides today was the clear follow through day, most technicians would take this as a very solid sign that this will emerge as a rally. I would expect by the end of the week we will be very close to today at worst and maybe ahead after some short-term pullback. Intel isn't what it once was and I don't think will affect most of the names that have driven this latest big cap, blue chip rally with some nice tech follow-through. It likely only serves as a very short-term profit taking excuse. This could slow the tech a bit, but I just see too many people lining up with the possibility this might be the long awaited rally that no one wants to miss.

[Ray Zee]

who can ever be right but this looks like a big bear market with no end in sight to it. the folks that have gone thru only the up years arent going to be prepared for any long term down market that lasts for many years. i dont know if it is this yet but it will happen. when it is happening you will find many, yes, many big upsurges from those trading and looking for bottoms to buy low from. upsurges of 20% to 25 % are common and mean nothing. what you will see is stomach turning days after days or small down days until the money is all dried up.
then you need a real turnaround in something that sparks a true change in the economy of the world. we are no longer an isolated economy, that can have a market that doesnt follow or have the world follow ours.

[Mark Heide]

Ray,

I called my financial consultant today (by the way she has been managing accounts for over 20 years, so she's not a greenhorn, she has seen it all). She basically told me if I don't like money, we can start burning your cash today in the stock market.

She said that last week the rally started because Citigroup and GE reported better profits that last year, but said that is misleading, because money was lost last year on all the days that these business were closed due to 911. So, it made this years numbers look better. So, don't be fooled. Or as Bush says you fool me once, and we won't get fooled again.

Futhermore, we talked about the traditional November and December technical rally. She said that there will be some gains but due to the situation in Iraq, she recommended that I stay out.

So, that's what I'm doing right now. I've got 25% tided up in a 5.2% (compounded daily) six year money market annuity, 50% in a 3.0% money market annunity that has no time restriction, and the rest in money market if any other opportunities arrise.

I am very suspicious of the market that goes up so fast in a few days. I believe that the bulls of the '90s believe that they will miss out on the profits if they didn't participate. But, in reality, if we were not faced with the possibility of war, the usual technical rally in November and December would be profitable.

Good Luck

Mark

[Mark Heide]

PokerBabe,

I hope you got the bull by the horns, and you better hold on tight, because you are in for a bronco ride this week.

IBM up $0.03 better than expected, but future is hard to determine. But, after hours trading should bring the opening price to about $70. I'd sell tomorrow, but that's me. Ride the bull, and see how long it lasts maybe, and good luck. Microsoft reports tomorrow after close.

If you do get rich, please hire me as your chauffeur for your new rolls.

Good Luck

Mark

[adios]

INTC is probably over valued at $13.50 a share. Declining margins and softening demand for PC's don't bode well for a $13.50 or so share stock price IMO. INTC is in excellent financial condition as it does have a lot of excess cash and very tiny amount of long term debt. I'm surprised INTC has held up as well as it has. INTC has broadened it's product line and AMD doesn't seem to be doing all that well either so maybe there's a reason for the seemingly too high valuation.

[Mark Heide]

Tom,

I believe INTC is overvalued. Do you agree with this instrinsic value estimate from quicken?

http://www.quicken.com/investments/seceval/?p=INTC&cmetric=intrinsic

Anyway, I think that there are many survivors in the technogogy sector that are sitting on alot of cash like INTC and CSCO. They made their money in the bull run of the late '90s, but their valuations are starting to get closer to approch their real value.

I still think that there are many investors that held on to the technology stocks and have not given up, believing that they will return to those high levels. A good example is JDSU. It took a while for this one to come down.

http://www.quicken.com/investments/charts/?period=3YEAR&charttype=HIST&big=off&plot=LINE&oth ersym=&mavg=&dji=&sp500=&nasdaq=&p=JDSU

Good Luck

Mark

[adios]

"I believe INTC is overvalued. Do you agree with this instrinsic value estimate from quicken? "

FWIW I think that's in the ball park. I would want to buy INTC at significant discount to that value.

"Anyway, I think that there are many survivors in the technogogy sector that are sitting on alot of cash like INTC and CSCO. They made their money in the bull run of the late '90s, but their valuations are starting to get closer to approch their real value."

Right. Future cash flows seem hard to estimate to me.

"I still think that there are many investors that held on to the technology stocks and have not given up, believing that they will return to those high levels. A good example is JDSU. It took a while for this one to come down."

Interesting that you bring up JDSU. Here is yet another company that is in a good financial position but has economic problems. In the case of JDSU the bandwidth glut makes it very hard to predict when their business might pick up again (if ever). The last time I looked estimates were such that it wouldn't show positive earnings is two years.

Since we're talking about tech. I really thought that the recovery in IT spending would be much more robust and would have happened much sooner. I readily admit that I was wrong. Over capacity; the slow evolution of software products (lacking the killer app); the cut throat competition that exists now; the economic uncertainty in the economy; and the government tax laws have all contributed to the lack of a recovery in IT spending IMO. It's unclear to me what kind of margins many of these tech companies will have in the future. Unless the valuation gets to be ridiculous like CSCO at at 5 or something I'd stay out of them. I wouldn't short them at these prices though. Here's a tech company I really like LLTC. The valuation is up there but they have incredible margins (which may invite stiffer competition); have continued strong growth in a challenging economic environment; have a pristine balance sheet with a lot of cash; are buying back stock; and paying a divi. It's risky and was a much better buy a short time ago.

[Ray Zee]

mark, sounds like she thinks well and i concur with alot of what she said. but also i rarely give much credence to someone that is any kind of advisor, as those people are the ones that havent made it themselves. after 20 years she should at least be a millionaire from her investments. if she isnt then she cant. get what i mean. i have no quams about listening to advisors but i cant see paying them anything at all other than lunch out. if you do buy her lunch have her pick the spot to eat. as we all know your choice of food leaves alot to be desired /forums/images/icons/smile.gif

[Mark Heide]

Ray,

I know you are not impressed by titles, so I will not brag, but so far she has been more correct about market conditions than any other professional I've encountered. She's been preserving my wealth, so she can make money off of me when the market gets better. I pulled all of my money out of equities back in May when the DOW was at 9500, and I thought that was depressing back then. In June, I bought two IRA money market annunities. The one that pays 3.0% is no longer offered, but I got it at the right time thanks to her. The best is that I can pull out this cash anytime I want. She looks for these types of deals, that's what she is good at. The best thing is that the only expense I have had to pay is $40 for the transfer of my funds from my old IRA to her company. She does not take any of my money until I decide to go back into investing in equities. Furthermore, she charges the least. If you are looking for capital preservation I suggest you send me a private e-mail and I'll set you up. All advice is free. Just like it is here.

Anyway, with all that fish you caught, why haven't you invited me to dinner at your cabin? I'll even clean the fish. /forums/images/icons/grin.gif

Good Luck and preserve your wealth.

Mark

[Mark Heide]

Tom,

Another problem is when these tech companies sit on their cash and consolidate. The consolidation can be devistating to their future surivial if they are laying off developers and engineers for future products. I'm sure five years from now some of these tech giants during the late '90s will be very small companies or cease to exist. Look at over the years how Microsoft has taken away market share from Novell. Novell used to be the one of the biggest software networkers in the early '90s. If these companies survive, it will be due to their management. As we have seen, management can destroy great companies.

Good Luck

Mark

[Mark Heide]

Tom,

LLTC looks like a well run company and passes the Warren Buffet test for investing. I will put it on my list. Thanks.

Mark