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Intel Has Never Looked Bluer

Anders Bylund
January 20, 2009

Intel (Nasdaq: INTC  ) is about as blue a chip as you'll ever see. Look up "blue chip" in the dictionary, and you'll see an "Intel Inside" logo right next to caricatures of General Electric's (NYSE: GE  ) CEO Jeff Immelt and a diagram of Exxon Mobil's world-leading market cap.

So, when Intel reports bad news and lowers its expectations, we should all panic and sell every share. No, no! Just kidding, let's not get ahead of ourselves. Intel's fourth-quarter sales dropped 23% from last year to $8.2 billion, and earnings per share shriveled by 89% to just $0.04 per share, but things could still be much worse. Management is taking a cautious tone, being careful not to boost our future hopes too far. This might actually be a great time to buy Intel.

The semiconductor mastodon sees gross margins shrinking to "the low 40s" in the next quarter, far below this quarter's 53.1%. Management didn't w