Intel: Too Much, Too Far, Too Fast
by ilene - July 15th, 2009 11:13 am
In this second article by Karl, he examines Intel’s quarterly results and is not as excited as the market. Why? Layoffs. Intel excels at cost management – good for Intel, but not a sign of healthy economic recovery. – Ilene
Intel: Too Much, Too Far, Too Fast
Courtesy of Karl Denninger at The Market Ticker
SAN FRANCISCO (Reuters) – Intel Corp’s quarterly results and outlook blew past Wall Street forecasts on better-than-expected consumer demand for PCs, especially in Asia, setting an auspicious tone for the technology sector.
Uh, well….
Sure, if you just read the PR on the earnings.
Someone filed that story before the conference call, or simply ignored it.
The strong growth came in Asia, specifically China, which blew out a huge stimulus program. Ok.
But it was specifically stated on the conference call that US consumer sales were weak, and repeating what DELL said earlier, so are enterprise sales.
The quote that was chosen is rather humorous:
Smith told Reuters that computer markets were strengthening and there were "pockets of relative strength" in consumer PC markets, as well as in the Asia Pacific and in China.
Pockets of relative strength.
Yes, there are. Netbooks in particular are relatively strong – a new, very-low-cost alternative to laptops. $300, 400, 500 machines – not the $1,000+ machines previously sold, and they’re replacing the demand that used to be filled by those $1,000 machines! That’s not so good.
Neither is this:
Executives warned that the corporate market remained weak, and Intel does not expect much change in the second half.
Heh wait a second – I thought this was a bullish report for capital spending and the chip sector? No? IBM’s primary market is to enterprise customers, not consumers.
The bigger problem for Intel is its P/E – now well over 20, its just too high – unless we get a very strong economic recovery.
If you’re in the Dennis Kneale camp on that, have at it. I’m going to pay close attention to the reaction in the real market tomorrow when the stock opens for trading by the pros – not the aftermarket daytrader games of the evening, with most of that volume happening before the…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site