"The decline in the price of Intel (NASDAQ: INTC) is disconcerting, but on balance, not a surprise," says tech guru Paul McWilliams.
Here, in his Next Inning newsletter, the advisor reassesses his forecast for Intel and the tech sector made at the start of the year, and his continued optimism for the stock's future performance.
"In January, I initially concluded that mature global economies were likely going to exhibit slow growth in 2008 and may dip through a recession.
"However, I also had forecast that emerging economies were large enough to where their contributions, even though they would also probably see some slowing in 2008, would keep aggregate growth high enough to avoid any serious worldwide macroeconomic pain.
"My conclusion was that while it is normal to expect spending by governments, businesses, and consumers to follow GDP patterns, there are what I saw then and still see now as good reasons to believe there would be a preference given for tech.
"In other words, my belief was then and still is today that spending on certain tech sectors would hold stronger than normal in the face of aggregate GDP slowing.
"At the top of my list for spending was my contention that consumers in emerging markets would increase their appetite for PC's this year.
"My thinking was that the first wave of consumers had already bought their cell phones, TV's, and DVD players, the first three priorities for consumers in these markets.
"I further expect that due to the declining PC prices and the much more common availability of broadband, consumers would trade the inconvenience of Internet cafes for a home PC.
"The data through the first half suggests this is pretty much what has been happening. As INTC bottomed in January I wrote that I was shifting even broad index money into the stock.
"While I certainly give room for INTC to come in softer than what the company has led us to expect in the second half, I think the valuation and longer-term story is compelling enough that it's time to start reloading the guns."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
Google's plan for netbook PCs moves higher into the clouds
Closing Bell: Stock bulls and dollar death (DDRX,GMCR, PEET, SBUX, EBAY, CI, TECD)
So long peak oil, here comes peak uranium
Reader Comments (Page 1 of 1)
9-12-2008 @ 3:53PM
MS said...
Your blog makes sense, a lot more than most analysts seem to have.
For around 18 months Freedman, billings and American Technology have been 'bashing" Intel and pushing AMD, for reasons known only to themselves.Both of these "analysts" have been consistently wrong. They seem to buy into AMD's PR releases, most of which have been proven to be hogwash. AMD has been claiming to be taking share from Intel and, when earnings report come out, it's been proven to be false.At year end, AMD said they would each break even in the second quarter of 2008. Facts prove it was a pipe dream.
Curiously, both these analysts downgraded Intel today based on their perception that, due to economic conitions, PC and server sales would soften but they didn't paint AMD with the same brush. IMO both analysts are flat out lying because they may have long positions in AMD. The SEC should demand that analysts show disclosure when the report on companies!