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ralph sekulski
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Sometimes I am tempted to speculate on a specific stock in a virtue of making some quick and easy money but then again I hold my self back and resist the temptations. Following basic fundamentals, researching before making the trade, and following the history of the company is my way of... More
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  • Intel Corp Weak Earnings AND NOW WHAT?  0 comments
    Jan 17, 2013 9:24 PM | about stocks: INTC, WDC, QCOM

    Intel Corporation is a semiconductor chip maker, which develops advanced integrated digital technology products, mainly integrated circuits, for industries such as computing and communication devices. The stock yields an impressive 4 percent, price/earning of 9.7 (industry average of 20.8), and price/book value of 2.2. Otherwise known as the "Intel Inside" chip maker that powers our laptops and is considered as one of the top brands for the broader computer public.

    Since the dawn of the first tablet introduced by Apple, consumers have been scaling down on laptops, switching their preference to tablets which are more productive for standard daily use and employ the power of amazing applications. In essence most chip makers have been getting the boot gradually, with margins shrinking, lack of growth and steady increase in operating expenses which for Intel rose 7.1 percent to $4.66 billion.

    To this affair, it does not catch me as surprise, that Warren Buffet is one of the first major investors who booted Intel Corp (NASDAQ:INTC) out of his Berkshire Hathaway portfolio all together. Warren was unloading Intel shares throughout summer of 2012 for an average price of $28 which was one of his most profitable investment of the year.

    Back to the main even that took place after the bell this afternoon; 4th quarter profit fell 25 percent, with profit of $2.47 billion, or 48 cents a share, down from $3.66 billion, or 64 cents a share same quarter of last year.

    Gross margin, which is closely looked by investors because it signifies future growth potential, narrowed to 58 percent down from 64.5 percent. Not a convincing number for future forecast.

    Since sales an personal computers are down year over year the company is trying to market themselves more aggressively into the mobile market. However, as sweet as that sounds, mobile market is dominated by Samsung Electronics, Qualcomm Inc. (NASDAQ:QCOM), and Nvidia Corp (NASDAQ:NVDA). With that said, there is plenty of ongoing competition with, Micron Tech (NASDAQ:MU), and Sandisk (SNDK) besides others, that are pushing aggressively into the mobile space. Too much competition may be positive sign for consumers but not so much for chip makers who will struggle with margin growth.

    With so many disadvantages in this name one would think that the smartest move is to take a hike and move the cash into something else. However, looking at the technical levels, especially after the 5.6 percent sell off after hours to $21.43 just before the stock closed up 2.58 percent before the bell, the stock itself is dragging along its 200 EMA. If an investor is found of impressive yield, a possible restructuring of the company, consistent cut in expenses for the past few quarters, and a demonstration of investment in research and development, maybe you should reconsider. I would not dive into this name all at once but a gradual positioning over a period of time would be suitable and smart.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: INTC, WDC, QCOM
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