Tag Archives: intc

I See Dead People

Dead people


I hooked up my accelerator pedal in my car to my brake lights. I hit the gas, people behind me stop, and I’m gone. Steven Wright


The Endless Search for Value

I know we have lessons to complete in Quantitative Value, but I also use this blog as a poster board to refer back to when assessing events, thoughts, and ideas.

After spending four hours groping through the Value Line’s 2,000 companies, I don’t find much of interest besides the uglies of Russian and Brazilian stocks, coal, uranium, silver and gold miners.  Most readers here are too refined even to think of investing in such cyclical companies.  What would your Momma say?

I find the relentless buying by insiders in small mining stocks to be interesting while corporate insiders in other companies want cash now and not stock. For example, https://www.canadianinsider.com/node/7?ticker=LYD


 Here is a company just pulled at random from Value-Line:

CPST_VL There is always hope   Value or Death Trap?  Going up the capitalization scale doesn’t help either: CRM The profits will come tomorrow. intc Will the bad news be priced in?

Where is the value 

Fair value on the S&P 500 has three digits

We don’t know when the movie ends, just that it will end badly.

Good Reading






Wow, well said and rare. Doubt if control grid mainstream media will be having this white hat on the air.  Orioles Executive Vice President John Angelos, son of majority owner Peter Angelos:

“Speaking only for myself, I agree with your point that the principle of peaceful, non-violent protest and the observance of the rule of law is of utmost importance in any society. MLK, Gandhi, Mandela, and all great opposition leaders throughout history have always preached this precept. Further, it is critical that in any democracy investigation must be completed and due process must be honored before any government or police members are judged responsible.

That said, my greater source of personal concern, outrage and sympathy beyond this particular case is focused neither upon one night’s property damage nor upon the acts, but is focused rather upon the past four-decade period during which an American political elite have shipped middle class and working class jobs away from Baltimore and cities and towns around the U.S. to third-world dictatorships like China and others.

The outcome plunged tens of millions of good hard-working Americans into economic devastation. Then they followed that action by diminishing every American’s civil rights protections in order to control an unfairly impoverished population living under an ever-declining standard of living and suffering at the butt end of an ever-more militarized and aggressive surveillance state.

The innocent working families of all backgrounds whose lives and dreams have been cut short by excessive violence, surveillance, and other abuses of the Bill of Rights by government pay the true price, an ultimate price, and one that far exceeds the importance of any kids’ game played tonight, or ever, at Camden Yards.

We need to keep in mind people are suffering and dying around the U.S., and while we are thankful no one was injured at Camden Yards, there is a far bigger picture for poor Americans in Baltimore and everywhere who don’t have jobs and are losing economic civil and legal rights, and this makes inconvenience at a ball game irrelevant in light of the needless suffering government is inflicting upon ordinary Americans.”

The Death of the PC and Intel (INTC)

In the case of specific industries, for instance in the airline industry, it’s absolutely true that a young analyst, looking at things fresh–if he is as hardworking as I was and in really willing to dig in–has a tremendous advantage over me. I will always believe, by the way , that in hiring analysts, the best guys are the ones with two or three years’ experience. Probably from a poor background–hungry, cynical, skeptical, taking nothing for granted. As concerns an industry, it is absolutely true.

However, as concerns the big issues–interest rates, what I call the universal issues–I won’t defer to anybody, because knowledge of history is so important. You have to an historian, not a ‘quant.’ Really, in those issues, there is nothing new under the sun. –Joe Rosenberg (Interview Grant’s Pub. April 6, 1987)


Yes, the news is out–there is weaker than expected demand in the Personal Computer unit as the global economy and Tablet sales depress Intel’s business, for now.

But with these financials INTC_VL Oct 2012 and the current price and INTC_35 Yr, I will take a look. I pray for a negative earnings report to send the price lower, but you should first value the entire company. What are you getting for your dollar?  The strong balance sheet (excess cash), return on total capital of 18%, 4% dividend yield (the company is paying out about 40% of its profits to its shareholders) and earnings yield of about 10% are what interest me.  I bet the PC industry will not disappear at the rate the market may be projecting, but do I really know that?

Update on Oct. 23rd, 2012: Death of the PC Articles


Answers to Chapter 6 Questions

“I just got out of the hospital. I was in a speed reading accident. I hit a book mark and flew across the room.” –Steven Wright

Q: What competitive advantages does Microsoft enjoy in the operating system industry?

The only segments within the PC world with features suggesting that there are barriers to entry protecting incumbent firms from new entrants are operating systems and CPUs. In both there are a small number of competitors and stable market share. Microsoft enjoys both customer captitivy and economies of scale in the operating systems business. Customers prefer to stick with what they know, especially regarding software. Swithching costs can be prohibitive when many users have to be taught to use unfamiliar programs. Search costs also inhibit change because the buyer has to have confidence in the reliability of the new system and the survivability of its creators.

The most important advantage is economies of scale. Writing complicated software keeps expensive engineers at their terminals and benches for hundreds of thousands of work hours. On the other hand, the marginal costs of the next unit of the operating system can be low as zero, and seldom more than a few dollars, even when burned on a CD and boxed with a manual.

Network effects enhance both customer captivity and economies of scale.

Q2: Why have “box makers” not been able to establishy a competitive advqtage over other competitors? Why was the enormous growth in the market for PCs such a problem for Compaq specifically? Did it have any alternatives that might have worked out better than its chosen strategy? Did Apple?

The Compaq story is so interwined with the hsitory of the PC that it is easy to miss the more general significance. It lost its competitive advantage and the resulting high levels of profitability as the markets grew and allowed competitors to develop equivalent economies of scale. Rosen, the venture capitalist, was astute to recognize that the quality and economies of scale advantages of Compaq benefited from in the 1980s were now history, and that unless Compaq changed its business plan, it was going to be fighting against lower-cost but qualitatively equal competitors. He and his team pursued the operational efficiency in the absence of competitive advantage.

Apple confronted a grim situation. In the two market segments–microprocessors and operating systems–there were powerful competitive advantages, enjoyed by Intel and Microsoft, based on economies of scale, supplemented by captive customers and some proprietary production technologies. The other segments were highly competitive.

Apple operated, either by itself or in partnership with Motorola, in five market segments within the PC universe. Apple did not possess a competitive advantage. Tying those segments together in the name of “synergy” did not help. Also, the evolution of the industry toward separate maor players in each segment argued strongly against the existence of significant advant5ages from vertical integration. Apple held only 10% of the PC market so it had no bargaining power in alliances.

Apple should have specialized and focused on operational efficiency at least to where it could have earned its cost of capital.