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| rnbaida |
 Posted: Wed Apr 19, 2006 2:44 pm Post subject: intc |
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Investing Sr. Associate
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| What do guys think about intels numbers? |
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| rnbaida |
| Posted: Wed Apr 19, 2006 4:01 pm Post subject: intc |
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Investing Sr. Associate
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| I think intc earnings were down 38 percent... I wonder why??? |
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| Dave Rathbun |
| Posted: Wed Apr 19, 2006 4:11 pm Post subject: |
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CFO
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Intel has had to cut prices to keep AMD at bay. Cutting prices means lower net revenues and profits. According to one article:
| Quote: | | Intel Corp. (INTC,Trade) on Wednesday posted a 38 percent fall in quarterly profit and cut its annual revenue forecast, but said it had stopped losing market share to rival Advanced Micro Devices Inc. |
So that's good news. They may have found the "sweet spot" where people are still willing to pay for Intel chips rather than switch to AMD. So they give up some revenues in exchange for retained market share.
| Quote: | Chief Executive Paul Otellini said in a statement that "PC growth rates have moderated over the course of the past few quarters, leading to slower chip-level inventory reductions at our customers."
The inventory build-up was "affecting our revenue in the first half of the year," Otellini said, but added that the company's new products were "setting the stage for a strong second half." |
And that's probably why the stock is trading up in after hours, just like I've said in other posts, reports are becoming less and less about did you make your numbers last quarter, but more and more about what are you telling me about the next quarter and the rest of the year. So corporate executives can say "well, we had some difficulties this quarter, but the corrections / adjustments we have made will make us stronger for the rest of the year" and all is forgiven.  I believe that's what happened with Yahoo, they only made the earnings estimate because it was lowered last quarter, but they said things look good for the rest of the year, and the stock jumped 7% today.
Intel says:
| Quote: | ...it had stemmed the slide in its market share and gave an optimistic outlook for the second half as it increases sales of new products, including its "Viiv" system for high-end home entertainment and notebook computers using high-powered dual-core processors.
"We held market share in units in the quarter," Chief Financial Officer Andy Bryant told Reuters. "The key positive for the quarter is we made the midpoint of the revised revenue guidance" given by Intel in March |
I would not buy Intel at this time. I might buy on weakness, especially if it drops below 15. I hold shares of INTC, and have for many years. I'm looking for an exit point at some point in the next six months to a year, so if they can peak back up over $25 or so I'm outta here.
I think the money to be made in chips isn't in CPUs anymore, but in specialty chips like Texas Instruments (TXN) which I don't currently own and Broadcom (BRCM) which I do currently own. |
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| qtnatty |
| Posted: Thu Apr 20, 2006 9:59 am Post subject: |
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New Poster
Joined: 28 Mar 2006
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In my real portfolio I'm taking a huge loss with INTC right now, but am holding it hoping for brighter days in the future.
Just sold TXN in my real portfolio and made a decent amount.
I know this doesn't really offer any advice or help... just posted my experiences... |
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| Dave Rathbun |
| Posted: Thu Apr 20, 2006 11:44 am Post subject: |
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CFO
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| qtnatty wrote: | | In my real portfolio I'm taking a huge loss with INTC right now, but am holding it hoping for brighter days in the future. |
Two questions:
1. Do you think INTC will turn around within 31 days?
2. Do you hold it in an IRA or a regular account?
3. Do you want a tax benefit to your current loss?
4. Do you realize I said two questions but asked four? 
Here's the reason. If you are not in an IRA, and you do not think INTC will turn around within 31 days, then sell it. You get a tax loss that you can use to offset gains of other sales, or up to 3,000 of ordinary income. Wait 31 days, and buy it again. As long as you wait 31 days, then it is not considered a "wash" sale, and you get to take the tax writeoff. You establish a new cost basis for your holdings going forward.
The wash sale rule says that you cannot sell INTC today and buy it back today and take the tax loss for it. You have to wait at least 30 days before you can purchase it (or something substantially like it).
Investopedia Wash Sale Rule
If you hold INTC in an IRA (retirement) account, then there is no benefit to this strategy, and you're stuck holding for the longer term.
But if you're in a non-retirement account, you can sell today and buy back a month from now and at least get some benefit out of the loss that you are currently seeing. |
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| Dave Rathbun |
| Posted: Thu Apr 20, 2006 11:49 am Post subject: |
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CFO
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A bit more reading at Investopedia found this article: Selling Losing Securities For A Tax Advantage
The author essentially says the same thing I did. If you think INTC will turn around for the long run, but not right away, then you can benefit from this strategy.
Suppose you purchased a stock at $50, and it's now at $30. You had 100 shares. You're looking at a $2,000 loss. You sell today, and recognize that loss, and get a tax benefit.
In 31 days the stock is trading at $25. You buy it back. Yes, it cost you $500 more dollars, but you have a $2,000 tax loss, plus a lower "cost basis" for your investment going forward. If you had held, you would still be looking at a 50% loss. Now if the stock recovers back to $50, you aren't breaking even, you had the tax advantage of the drop plus you're now looking at a $2,500 gain.
Ultimately you will eventually have to pay taxes on the new larger gain amount, so it's not like you're getting something for nothing. But you're getting something now (tax loss) and establishing a new purchase base cost for the future.
I have, unfortunately, had several chances to exercise this strategy.  |
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| qtnatty |
| Posted: Thu Apr 20, 2006 6:53 pm Post subject: |
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New Poster
Joined: 28 Mar 2006
Posts: 9
This Month: 0
2143.22 e$
Net worth: 4,191.42
Portfolio Value: 2,048.20
Monthly Return: -29.40%
Trades this month: 0
Churn Rate: 0.00%Items
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| Thanks, Dave Rathbun, for the helpful advice and strategy. |
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