The problem with Intel's price is not the hedge funds. The problem is revenue and earnings. Just look at the last ten years: Between 2003 and 2009 revenue ranged between $30.1B and $38.8B with no consistent growth. Earnings fluctuated between 77 cents and $1.40, with no consistent trend there either. There was a slight increase in revenue in 2010 and again in 2011, but for the past three years has been flat to down, with more of the same expected for this year. Earnings have been flat to down over the same period. Until Intel can prove itself with consistent sales and earnings there is no compelling reason for anyone to drive the share price higher.
I don't rise to his bait anymore, but will now jloin you and others who have long ago seen through his hypocrisy and intolerance.
Should I presume that Intel's chiips are price-competitive, or offer something that Linear Technology does not?According to the WSJ article, Linear's chips sell for a fraction of Intel's.
. . .for chips in automobiles? It looks like Linear Technology has a pretty firm grip on providing chips for everything automotive, e.g. entertainment and navigation systems, emission controls, power steering, battery management, etc. according to the WSJ. These are analog chips that sell for "a fraction of the cost for companies such as Intel."
Linear stock is at a 10-year high at around $48. Revenue increasing, earnings for the year are estimated at $1.93, and is selling at 25X earnings. Intel, on the other hand, has wobbled around $24 for twelve years, has basically the same earnings estimate, and is selling at about 12X earnings.
Why is an analog chip producer hitting all-time highs with increasing revenue and earnings when the cutting edge chip producer can't seem to gain any traction with either revenue or earnings?
"Having fun" losing money with ARMH? You must really be having fun with Intel. You should go to Vegas---at least you get free drinks.
Interesting WSJ article today. Excerpts:
"Linear's chips are used in cars' entertainment and navigation systems, as well as emission controls and power steering among other things."
[Linear's] "chips aren't considered 'leading-edge' like those that act as brains for laptops and smartphones. So Linear can produce chips on older manufacturing gear for a fraction of the cost borne by companies such as Intel."
"It is expected to average roughly 9% annual revenue growth in the next three fiscal years, with the auto segment being a major driver of that."
So here you have a company selling analog chips (hardly cutting-edge) and expected to earn $1.93 in 2014 and $2.26 in 2015 on solid revenue increases of 9 percent per year. The stock is trading at $48 per share--a ten-year high and 25 times earniings.
Intel, on the other hand, is manufacturing cutting edge chips and is expected to earn about $1.90 in 2014 on flat revenue, with no clear line of sight for 2015. The stock is trading at $24.50--flat for twelve years and 12 times earnings.
Looks like the tortise is outrunning the hare.
Great presentation this a.m. Everything falling into place. One variable is ongoing negotiations with unions, but history indicates that LUV has effectively worked through those in the past.
"Technicals tell you how the market is interpreting current company/macro fundamentals.'
If this is true, and applying it to Intel (which has been trading in a relatively tight range for several years), it would suggest that the market has not been overly impressed with these fundamentals.
Based on your investment logic the markets should have been down for the last 6-plus tears because the economy has been stagnant. Instead it is hitting new highs. Now you find a speck of good economic news and don't understand why the market doesn't go higher. Looks like you learned how to become a bean counter at Auburn, but not much about the stock market.
A more specific answer to your question came today. Looks like the compaany is offering $500M in new notes at an interest rate of 4.625 percent, due 2024, to replace $500M in old notes with interest rates of between 4.750 and 5.750 percent due on various dates. Hard to calculate the reduction in debt service, but will obviously help.
Peter Lynch defines "slow growers" as stocks that were once "fast growers" with a 2 percent-4 percent growth of earnings and stock price. They are also identified by the generosity of their dividend. He says he doesn't spend his time with these "sluggards." If it weren't for earnings and stock price, Intel might make it into this category.
Here is what has happened to Intel and key market benchmarks from September 1, 2010 (the approximate date of my first purchase of Intel) through March 4, 2014:
DJIA +60 percent
NASDAQ +100 percent
S & P 500 +74 percent
Transports +75 percent
Intel +36 percent
Even the lowly Utility Index is up 31 percent
In the past four years (2010 through 2013) Intel revenue is down 20 percent (flat for the past three years) and earnings are down seven percent (down 20 percent for the past three years).
Looking ahead: 2014 revenue and earnings flat, at best. Continuing gaps between company promise and performance. Tinkering around the edges with pop-up stores (failed), TV (failed) and smart watches (to be determined). Intel's bread and butter PC sales still seeking a bottom. Still lagging behind in smart phones. Comnpetitors not standing still.
My conclusion: Intel may have a great future. But until it can create revenue and earnings growth the stock price will be stuck in a tight trading range as it has been for the past 12 years. Everything else, including debates on Intel's technical prowess, is white noise. I'm out at $24.50 (with a long-term average cost of $21.50). May be back when there is a better line of sight to Intel's future.