Buy Intel (INTC)
Shares of Intel (INTC) have been hammered on news showing that PC sales to consumers have been soft in the current back to school quarter.
I think that sell off ignores the company’s strengths in other markets, such as servers, that show no signs of slowing growth, and it ignores the huge replacement cycle coming for PCs as businesses and consumers all make the purchases that they put off during the recession.
Timing a product replacement cycle in an economy as tough to read as the current one isn’t easy—but thanks to the drop in Intel’s price the stock comes with a very acceptable 3.4% dividend yield. That means you’ll get paid to wait for the replacement cycle to kick in.
And at a rate that’s well above the current 2.75% yield on 10-year U.S. Treasuries.
A technology stock with great potential for capital appreciation and paying a 3.4% yield?
Those don’t come around very often. Read more
Update Intel (INTC)
Sales of server chips were up 170% in the second quarter of 2010 from the second quarter of 2009, Intel (INTC) announced last night (July 13) when the company reported earnings.
When I last updated this stock back in April after the company announced first quarter earnings and an increase in gross margins to 63.4% I wrote “The company had been projecting gross margins of 58% to 64%. The increase in gross margins is the key piece of news in this report. To get margins up to that level the product mix at Intel has had to shift toward a higher proportion of sales from more profitable server chips. Industry watchers have recently forecast a two-year cycle of big increases in server purchases as corporate customers upgrade their equipment. Intel seems to be signaling that it’s going to ride that trend to higher margins for more than just the next quarter.”
Exactly, Intel said in reporting second quarter numbers. Read more
Looking for tech stocks? Try the server market
The Great Recession created quite a backlog in the technology sector.
The average corporate notebook computer is now four years old, according to Needham & Co., and the average corporate desktop is five years old.
That catch-up market is huge. One reason I own shares of both Microsoft (MSFT) and Intel (INTC) in my Jubak’s Picks portfolio.
But the catch-up market for servers, the computers that serve—coordinate, distribute, regulate, and police—networks of users ranging in size from small company networks to the data centers at Wal-Mart (WMT) to the data farms run by Amazon.com (AMZN), Microsoft (MSFT), and Google (GOOG) , may be even bigger. Not in units, certainly, but in dollars. Read more
Update Intel (INTC)
Blow out quarter. Stunning increase in guidance. A totally justified 4.3% gain in the after-hours market on the day it announced earnings.
Now we’ll see if Intel (INTC) can juice the rest of the technology sector. (Look today to see how Microsoft (MSFT) reacts, for example.)
After the market closed on April 13 Intel announced earnings of 43 cents a share. That was 5 cents above Wall Street projections. Earnings for the first quarter of 2009 came to 11 cents a share. Revenue increased by 44% to $10.3 billion. Analysts had projected $9.84 billion. Gross margin climbed to 63.4%. That was above the company’s January forecast of 59% to 63%.
But the good news didn’t stop with the current quarter. Read more
Today’s earnings from Intel will set the tone for tech stocks–and the market as a whole
Intel (INTC) reports first quarter 2010 earnings today, April 13, after the close.
The market’s reaction to Intel’s numbers will tell us more about the market than about this technology stock. (For more on the prospects for earnings season as a whole se my post http://jubakpicks.com/2010/04/06/are-stocks-headed-for-an-earnings-season-of-selling-on-the-good-news/ ) Read more
