Intel
According to the company, first-quarter net sales numbers will not fall in the previously given range of $9.1 billion to $9.7 billion. Instead, shareholders can now expect revenues to come in at $8.7 billion to $9.1 billion. The culprits? Buying demand will be off, and it will be a challenge to maintain market share.
That's a big ouch! for owners of the stock. What do you think happened when Mr. Market heard this? Take a look at this three-month chart: You can see on the right side that Mr. Market was up to its torturous ways again.
We make fun of Mr. Market around these parts a lot -- as we should -- but let me say that it is only natural for revaluation to take place after news like this. The question, though, is this: Should an individual investor bug out at such bad corporate tidings?
It all depends. The current Intel situation provides a nifty opportunity to engage in an important exercise: the double-checking of the thesis. You bought the stock for a reason: Does that reason still hold?
I don't own Intel myself, but I did write a bullish article on the Dow component at the beginning of this year. I obviously don't look so visionary right now, so let me see if my thinking still holds.
Intel is, without question, a leading brand in its sector, both from a consumer and an enterprise viewpoint. It has had a very fruitful relationship with Microsoft
In addition, as far as I'm concerned, Intel will remain a company that will generate good profit margins and decent dividend increases over time. If you have a long-term horizon, you should do well. I won't argue that Intel won't disappoint this year in certain metrics. But taking into account its brand position, its cash flow management, the upcoming Vista onslaught, and how Intel passes the "it should still be here 50 years from now" test, I'd have to say that the revised outlook shouldn't cause anyone to panic, because I just don't perceive a huge change in the overall thesis. That's only my opinion, however; all Fools must judge for themselves whether Intel remains a worthy candidate for investment dollars. I encourage all readers to be skeptical and perform their own due diligence.
Related articles:
Microsoft is a Motley Fool Inside Value recommendation. Click for more on our newsletter about overlooked stocks.
Fool contributor Steven Mallas owns none of the companies mentioned. The Fool has a disclosure policy.
