Feeds

Baseball legend slaps 'raging buy' on Intel

Its, er, wireless biz (at Marvell) will surge

Maximizing your infrastructure through virtualization

Do you want to take stock picking advice from a baseball player? Mmm, probably not. So beware of Lenny Dykstra's raging buy on Intel.

Since retiring from the big leagues, Dykstra has turned into an entrepreneur of sorts, owning car washes, real estate operations, and a variety of other smaller businesses. Dykstra also manages his own stock portfolio and writes about the experience for TheStreet. And, while his columns are sometimes interesting, Dykstra's company assessment skills appear more than rusty with this week's note on Intel.

Intel's shares have suffered through a three-year slump, leaving the company's stock price at about $19, at the time of writing. Dykstra thinks Intel is ready to surge because the company makes a tonne of revenue, has plenty of cash on hand, and goes up against rivals from a "position of strength."

While focusing on these positives, Dykstra ignores the major factors that have hurt Intel's shares such as a slowing overall semiconductor industry and a more competitive AMD.

"Shares have been hurt by weaker-than-expected sales and lacklustre forecasts, but semiconductor inventory levels should begin clearing out by the middle of this year," he writes. "Also, all chipmakers have been hurt by a shift in the wireless handset market toward lower-end phones. However, another shift will occur later this year, as the consumer returns to the new, high-tech handsets, thereby improving growth."

He sure places a lot of emphasis on Intel's handset chip business, which accounts for a teeny fraction of Intel's overall sales, and has a lot of confidence in this mid-year, magic turnaround.

And it only gets worse.

"Although the PC processor is a mainstay, Intel has expanded its product lines to serve the networking and communications markets," Dykstra continues. "The company's mission is to be the preeminent supplier of silicon chips and platform products to the worldwide digital economy, and Intel has taken apart Advanced Micro Devices."

That last sentence should get your forehead wrinkled for a couple of reasons.

For one, Dykstra has lifted that "preeminent supplier" talk right off Intel's website and claimed it as his own language. Have a look for yourself.

Secondly, Intel hasn't exactly "taken apart AMD" what with AMD gaining massive amounts of market share over the past couple of years, establishing itself as a major player in the server processor market and punishing Intel's bottom line through a price war.

You'll recall that Intel adjusted to "taking apart" AMD by getting rid of close to 10 per cent of its staff.

Granted, Intel's share price seems attractive at $19. You get the feeling that the company will always win out in the end against smaller rivals. Intel has the cash and might to wait out momentary challenges from competitors.

Dykstra, however, fails to realise that Intel's drop reflects a changed marketplace in which Intel is unlikely to take 90 per cent or more of the x86 chip pie again. It has a dramatically improved product line and has started to win some business back from AMD. Still, it's tough to imagine Intel's share price shooting up in the near-term given the intense competition it faces from AMD on the product and pricing fronts.

Dykstra fails to provide any sound justification for buying Intel, opting to rely on cliché rather than fact.

But, if that's what you're into, go for the gold. Bet big on Intel's wireless and networking chip businesses.

(In its most recent quarter, Intel's flash business turned in a $186m loss on $576m in revenue, while its "other" businesses that Dykstra loves turned in a $1b loss on $363m in revenue. Intel also loved its communications portfolio so much that it, er, offloaded its mobile chip assets to Marvell. So, that mobile chip surge might not do as much for Intel's shares as Dykstra thinks.)

"Intel has been playing in the big leagues for a long time, and it will always be the biggest and the best, period," Dykstra writes. "I am going to buy 10 July 15 calls (NQGC) at $4.50 or better, which is equal to 1,000 shares of Intel's common stock. This is one of the safest plays I have written about. Lock and load!" ®

The Power of One eBook: Top reasons to choose HP BladeSystem

More from The Register

next story
Sysadmin Day 2014: Quick, there's still time to get the beers in
He walked over the broken glass, killed the thugs... and er... reconnected the cables*
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Auntie remains MYSTIFIED by that weekend BBC iPlayer and website outage
Still doing 'forensics' on the caching layer – Beeb digi wonk
SHOCK and AWS: The fall of Amazon's deflationary cloud
Just as Jeff Bezos did to books and CDs, Amazon's rivals are now doing to it
BlackBerry: Toss the server, mate... BES is in the CLOUD now
BlackBerry Enterprise Services takes aim at SMEs - but there's a catch
The triumph of VVOL: Everyone's jumping into bed with VMware
'Bandwagon'? Yes, we're on it and so what, say big dogs
Carbon tax repeal won't see data centre operators cut prices
Rackspace says electricity isn't a major cost, Equinix promises 'no levy'
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.