Friday, September 01, 2006

Intel growing its wings

Intel (INTC) is widely expected to announce on September 5, 2006 (Tuesday) that it will be laying off about 10,000 workers, almost 10% of its workforce. The results of a three-month analysis of its entire operations with the aim of cutting $1 billion in costs are expected by the end of Q3. If this reduction in workforce happens, the total reduction in recent months will be 13,000, that comes close to Wall Street expectations of 16,000. This might just be the right news to kickstart growth in the INTC stock price, which closed at $19.57 yesterday.

Are the dog days for INTC over? If you are looking at semiconductor/chip stocks, I think this is the right opportunity to get in to INTC.

For starters, with this recent news, Wall Street analysts will not be as skeptical as they were. Intel's high inventory levels are starting to decline as it competes with Advanced Micro Devices (AMD) by reducing prices. Intel has a new lineup of 64-bit processors to be coming into the market soon. Independent chip reviewers have conceded that new Intel chips handsomely beat rival AMD chips in many benchmarks. With the memory intensive Microsoft (MSFT) Windows Vista being expected within the next four months, INTC can expect an increase in demand for its new products. The recent positive indicators in its WiMAX strategy to provide affordable wireless broadband access are also worth noting.

With a long corporate history, lower debt compared to its competitors, a strong brand name recognized all over the world, new superior products, a lean-and-mean INTC stock is all set to be loved by Wall Street. I will be waiting and watching how high the stock will fly in the next 3-6 months.

(This article was written on September 01, 2006 and I am still bullish on Intel.)

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