[The next day the NASDAQ futures turned around for some reason and so we had to gap up and then sell off all day, before a little rally at the end. Lots of technical damage to stocks that won't show up tonight. But Proxicom...beat earnings and 2 for 1 split, baybee!]
GTW sucks. Gateway passes out systems at inflated prices with poor components. DELL sucks. Dell just warned of lower earnings...again. Dell is the best computer boxmaker, but all that growth is built into its stock. And who's been making them suck even more as of late? Intel (INTC).
Yes, the big bad boy Intel. This is of course the company that probably produced the CPU in your computer. This is the company that bullies competitors and even its own business partners. This is the company that kept the biggest motherboard manufacturers from producing motherboards for the AMD Athlon line for a long time. This is the company that sells overclocked CPUs to customers and then gets angry when computer geeks overclock those CPUs themselves. Most notably, this is the company that has single-handedly disrupted the whole boxmaker and CPU industries.
How has Intel disrupted everything? Well, first of all, it's been waging war on AMD, its chief competitor in the CPU market. Intel released the Celeron CPU, which is the same thing as a Pentium II (no shit) but without as much L2 cache. This cut into the market AMD was winning with its cheap low-end CPUs. Intel lost a ton of money on its Celeron, but it figured it was worth it hurting AMD. Meanwhile, AMD was busy working on its next chips, the most recent being the Athlon. Intel, I've speculated with my roommate, has all sorts of advanced tricks up its sleeve it pulls out only when AMD is about to put out a product with it. Intel stops at nothing to get its competitors out of the way. That is, except for producing clearly superior CPUs and architectures.
This became evident when AMD rolled out its Athlon and took over the contest of who had the fastest MHz chip. Even though Intel usually announced faster CPUs before AMD, AMD actually RELEASED faster chips sooner than Intel. Intel showed itself to be all talk.
And talk it did. It beat up on motherboard manufacturers the same way Microsoft does, by making them worried that they'll withdraw their business if the company supports a competitor. AMD's Athlon didn't have many motherboards for a long time. It's only now getting some decent boards.
Meanwhile, Intel kept assuring its shareholders that things were okay. Nothing to be worried about! Hey, we're still beating earnings estimates (don't look up our sleeves) and the reason we're not getting chips out fast enough to clients is that the demand is too high!
Intel has a vast array of fabrication plants, the most of any of the companies out there. Yet it can't meet demand, it's not blowing out earnings estimates, and most importantly, its newest CPUs are being delayed.
It didn't really add up. AMD Athlons have the fastest flavors of CPUs out there, with an 800MHz at this point, I believe. Intel has been talking about its 750MHz and 800MHz for a while now, but they are yet to show up in the market.
So yes, there's a huge demand for Intel processors out there. Of course. People want new, fast computers. But it's not that Intel can't keep up. It's that Intel can't produce enough of its higher end chips to sell. Its yields must be bad. Something's wrong there.
Of course, Wall Street didn't seem to see that. INTC has had some nice runs. Never mind that Gateway got quite cross with Intel and announced that its own revenues would be hit because Intel couldn't supply it with enough CPUs. Gateway, in one of the smartest moves I've ever seen from them, said that they would use AMD as their alternate supplier because Intel couldn't deliver. Gateway had just turned away from AMD, but had enough humility and sense to go back to AMD for chips.
And just last night, Dell warned that Intel could not produce enough chips for it either (combined with Dell's own problems, of course), so Dell would have lower earnings and revenues. Dell is the only big company that does not use AMD's CPUs because it's Intel's little lovebitch. Now it pays for not following competitive rules and making sure supply is there for products. Dell is telling its new customers right now that their systems are delayed because of CPU shortages.
Intel was trying to save its own ass all this time, but all the internal problems it's having finally spilled out and affected other companies. This is so irresponsible. It's following two bad tenets: 1) worry more about your competitor than your own company, and 2) worry about your shareprice.
Meanwhile, AMD has been doing extremely well. Boxmakers and computer techies are all over it like flies to shit. They need AMD. The Athlon is a wonderful CPU that performs in all areas. With AMD's new fabrication plant in Dresden that it's sharing with the behemoth (a company I do like) Motorola, it's very happily churning out the latest CPUs with the latest technology available to do it with. AMD encourages overclocking, which the techies love. AMD just had a blowout quarter, crushing earnings estimates and pulling a profit for the first time in years. The stock price has gone from a low of maybe $14-16 up to a high of $45. Sadly I missed the first wave, but had an average position of $32 up to $43 where I sold. AMD is no longer the raggedy upstart it once was.
And Intel has dropped the ball, like other "pioneers" that turned around to see who was behind them, like the notorious Netscapes and 3dfxs. If they'd actually worry about putting out the best product instead of whining about competitors, maybe they'd get somewhere. I don't like Microsoft either, but at least it doesn't worry about competition. (heh heh)
I love those Janus mutual funds. I really do. I regret that my IRA is in an index fund and not Janus. But oh well. I'll bet on 50 years or so of consistent economic maturity. I would like to get into Mercury or the Global International or some others that...well...let me explain. Why do mutual funds still hold dogs like DELL, INTC, MU (Micron), GTW (Gateway), CPQ (Compaq), MSFT (Microsoft) and other old favorites? These stocks have nothing left in them. They all have their own problems and maybe they'll be nice here and there, but blah. They're not the same after they've split a few dozen times. Janus for some strange reason still has some core holdings of these stocks in its funds. Blah. Give me wireless, ISP, B2B, fiber optics, etc. any day. Semiconductors are more like commodities these days and are boring.
I'm long AMD to $100/share. I'm happy that Intel sucks. But the problem is that a big company like INTC can wreak havoc on the entire market with its shenanigans. Now the NASDAQ futures are down tonight and we're looking to drop lower, which will cause a lot of stocks to bust their moving averages, probably. Unless lots of buying steps in, which it has had to do quite frequently recently. Is it really an efficient market when a company fudges earnings numbers, lies to shareholders and clients, and then misdirects things when they go bad?
Intel sucks hardcore, and I'm buying an Athlon overclocked to 850 or 900 as soon as the price drops a bit more. :)
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