Now and then I like to watch Jim Cramer's "Mad Money" show on CNBC to see what direction the wind is blowing. That is, I think Cramer has a very entertaining show, especially if you like shouting and nobody taking the other side of his arguments, but it seems he echos what is "group think" that tells you "why" a stock is up or down, but does very little for making good, long-term decisions. Sponsors who sell trading strategies love his show as it is easy to sell stocks and advice for stocks that are moving.
On his October 28, 2012 show during the "Lightning Round" he gave a bearish call on Intel:
Intel (INTC): "During the period when it was doubling and doubling again, I was behind it, but I have walked away from it. INTC has a good yield, but it has no product used by mobile to speak of, except their own, and that isn't doing so well. INTC is stuck in the world of the PC, so even though it has a good yield, I say 'don't buy."Two weeks later, on November 11, 2012, I bought shares for my personal account at $20.06. I also increased the "Auto buy at $19.75" price target in my newsletter for my "Explore Portfolio" to anything under $20.25 to take advantage of any price weakness.
Late last month, on November 21, 2012,during the "Lightning Round" Cramer again gave a bearish call on Intel:
Intel: "I’m not going to tell someone to sell this stock with a 4.6% yield. I am going to say wait until it goes to 4% for a bounce, because I do believe the yield will support it, but I don’t see any reason why you should own it. Sell it only after a bounce when the yield drops to 4%."Yesterday I heard him trash talk Intel again on the "Morning Bell" show by saying Intel should have used their cash to buy Arm Holdings (ARMH) when Arm was cheap. I couldn't have disagreed more. That motivated me to write this article saying why I disagreed:
Why Intel is a Great Buy (while at $19.75). Excerpts
- I bought my first shares if Intel in April 1993. At a split-adjusted price nearly 10 times what I paid for those shares, I believe Intel is a safer, more compelling buy now than it was in 1993.
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| Intel Since Inception |
- Yesterday, Dec. 4, 2012, Intel announced the largest bond sale in its history to buy back stock. This offering was 20% larger than its $5 billion similar offering in September 2011.
- Wise investors will take advantage of low prices now to buy before tax loss selling ends and Intel uses these funds to repurchase shares.
- I think Intel did something far better than buying ARM. Intel invested billions in new semiconductor equipment to build products with better performance than anyone can get from ARM chips running on competing processes.
- SummaryIntel is a great buy here, especially under $20. Intel's valuation numbers will improve as they buy back shares with the funds from its just announced $6 billion bond offering. I took profits at $27.25 in February of this year with my newsletter explore portfolio, but now I am buying back.
- I would not be surprised to be taking profits in some of the Intel stock I've bought recently right around the time when TV gurus jump on the Intel bandwagon again next year. Jump on now and get a good seat!
Yesterday Intel closed at $19.85 and now it is over $20.
Was yesterday the last chance to buy Intel under $20? I didn't mention in in my Seeking Alpha article, but I think Intel will probably build chips for Apple (AAPL) in the near future. By the time that is public knowledge (ie Intel chips showing up in tear-downs of Apple products) the stock will probably be $30 and then Cramer will change his tune.
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I wrote "I think Intel will probably build chips for Apple (AAPL) in the near future."
ReplyDeleteNot only that, but It would not surprise me if Intel builds chips with its fab for some it might compete with. When I worked at HP we competed DIRECTLY with IBM in laptop PCs. I flew to Chicago with my boss to meet with IBM managers and engineers from New York (neutral ground) to discuss a wireless infrared module we were about to design with IBM as our largest customer. We got the business, the product was a success (95% market share) and all parties were happy, including HP's computer division who also benefited from the lower cost we were able to offer due to the IBM volume.
A good article on Intel's cloud business:
ReplyDeleteIntel’s Schooling From the ‘Big Four’ Cloud Customers
"The information is particularly useful as Intel strives to make its data center business recover some of the loss suffered in the collapse of the personal computer market. In the first nine months of 2012, Intel’s PC client group had revenue of $25.8 billion, a drop of 2.25 percentage points from the first three quarters of the previous year. The data center business pulled in $7.9 billion, an increase of 6.7 percent. Ms. Bryant has told her bosses that she’ll double annual revenue, to $20 billion, by 2016."
and something we used to do at HP when I was there in the semiconductor group "Google is known to have developed its own semiconductors, for example, but declines to patent the product. The methods cited in the patent might give too many clues about what Google is doing next."
HP spun off the part I was in as Agilent... and Agilent spun off the semiconductor business as Avago... No wonder HPQ stock is down so much, they sold off the good parts after I left in late 1998! :)
From "Intel: We could be a foundry if the fit was right
ReplyDeleteSummary: Intel CEO Paul Otellini said that the company is open to manufacturing chips for other companies if the situation isn't competitive. Would Apple fit?
Regarding making chips for Apple, Otellini said:
That would be an interesting model.
He added more color to the Intel as manufacturer for others idea:
As you know it takes a while to move your designs over, to design them under our process, for us to be able to bring them in house and so forth and our foundry customers aren't going to announce that they've moved until they've moved because it would hurt them at their current suppliers.
So for obvious reasons this has been a lower profile deal than the kinds of things that you see with early announcements.
But no, I don't think that. I think it makes sense for us to have that kind of capability particularly as our semiconductor lead gets wider over the industry and that allows us to then consider and take business on a value pricing model versus cost-plus pricing model which is what the foundry industry in general uses. I don't think cost plus makes sense for us. We want to get paid for the value of the -- the performance of the transistors.