Covello, who has a Sell rating on Intel shares, and a $16 price target
Where is Covello ??
Covello, who has a Sell rating on Intel shares, and a $16 price target, thinks a 3% climb in the shares through yesterday was all about investors expecting Intel would cut some of the $13.5 billion in spending it has planned for this year. After spending 100% of operating cash flow in seven of the last eight quarters, on capital spending, on dividends, and on share repurchases, net cash fell from $20 billion to $5 billion from Q4 of 2010 through Q4 of last year.
Covello is a moron who knows nothing about the industry. As I said before, he is CAPEX centric. It is a mindless complaint he has logged for a long time. "Well CAPEX is too large." Now he thinks the rally is all about CAPEX dropping?! Does the guy ever contemplate anything except CAPEX? I have news for Covello, not only will CAPEX not go down but it will accelerate and so will earnings. End of story.
Covello shows how disconnected analysts are from the reality of competing in the big leagues where corporate leaders routinely make bold decisions and risk huge amounts of capital to keep their company on top. Analysts are largely individual contributors that have never run anything than a spreadsheet. What do they know about bold risk taking?
Covello will ask his "Intel margin problem" question next Tuesday afternoon at the earnings call. He will get a reasonable answer from Intel. Wednesday AM Covello will lower his rating from a SELL to a SELLSELL and lower his price target to $15.99.