RBC Analyst Apjit Walia: Intel Shares are "Dead Money" (INTC)

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Includes: AMD, INTC
by: William Trent, CFA

When we first saw the headline, Analyst Calls Intel Shares ‘Dead Money’ at Forbes.com, we got that tingly feeling you get when you are about to skewer an analyst. We thought a Sixth Sense reference would beg for a snide comment on the analyst’s sixth sense kicking in to downgrade the stock now, after it is already down 35 percent this year.

Then we saw that the Analyst was Apjit Walia of RBC Capital Markets. The guy who was one of the first to call the end of the semiconductor cycle earlier this year. The guy who slashed his estimates and price target on Intel back in February. Apjit is a righteous dude, and worth following. So no skewering today.

Analyst Calls Intel Shares ‘Dead Money’ - Forbes.com

With the personal computer market for June looking “increasingly bleak” for Intel, RBC Capital Markets recommended investors use rallies to sell shares of the chip maker.

Intel’s June quarter is tracking at the low end of guidance, and may miss earnings, according to RBC analyst Apjit Walia in a report Monday.

The market for PCs is “in the doldrums” and getting “progressively worse,” he said.

In addition, Intel’s current price war with Advanced Micro Devices (NYSE:AMD) is allowing Intel to take back some unit share but not revenue share, he said. He added that AMD is “also suffering from the bleak end demand environment.”

Walia recommended investors sell Intel stock, saying that “there seems very little chance of Intel’s gross margins bottoming before end of the September 2006 quarter.”

He also characterized the stock as “dead money.”

INTC 1-yr chart:

INTC 1-yr