COMMENTARY -- When analysts start predicting PC doomsday scenarios all at once, Intel begins to look like any old company and the Nasdaq can't fall far enough to attract buyers, it may be time to take a deep breath and use your noggin'.
We're not going to tell you to start bargain hunting. Catching falling daggers is not worth the effort, but a little perspective goes a long way. When investors throw up their hands and give up, it may indicate the bottom of the tech problems.
Or maybe it doesn't. No one knows for sure. But here are a few things to ponder:
Intel: Just another company?
Intel (Nasdaq: INTC) has had more than its share of bad news, and analysts poured on some more Thursday. Between profit warnings from Gateway (NYSE: GTW) and Altera (Nasdaq: ALTR), Intel's quarter is in jeopardy, said analysts.
With every dose of bad news, Intel falls in stature on Wall Street. Intel has dropped to being the sixth largest company in terms of market capitalization. General Electric is the most valuable, followed by Cisco, ExxonMobil, Microsoft, Pfizer and Intel, which has been in the top five for a long, long time.
Lehman Brothers analyst Dan Niles cut Intel from "buy" to "outperform" and said the chip maker's quarter is not a sure thing. Even though Intel lowered guidance, the company can still stumble.
A few analysts smirked and said Intel shares are already as low as they're going to go.
Without going on a limb, J.P. Morgan analyst Terry Ragsdale said it's too early to write off Intel. "Despite wave after wave of bad news, Intel's stock refuses to break $35 on the downside," he said.
Ragsdale, who stuck with a "buy" rating, said he wasn't recommending investors "back up the truck" for Intel shares, but added that the stock was a "lesser evil buy."
"It's going to be hard to find any incremental reasons to hate the stock from here," he said.
PC death knell
What do you do when analysts suddenly agree the PC industry is dead? Run the other way. You would have been hard pressed to find an analyst NOT making the comparison between PCs and TVs. As we know, TVs are complete commodities. Maybe PCs hit an inflection point where the industry is written off forever.
Now all these dire projections were based on consumer sales drying up. There are corporate sales, which may be rebounding slightly, and international sales. If enterprise sales and the outlook abroad brightens, a lot of these analysts may change their tune.
The other thing to think about is whether Gateway's macroeconomic-based profit warning was too dramatic -- it predicted flat sales for 12 to 18 months. Gateway's revenue growth has been sluggish for the last few quarters, but the company's beyond the box strategy boosted earnings.
Maybe the economy is going into the toilet. Or maybe Gateway just wanted to "hammer the expectations bar into submission" to look good later, said Ragsdale.
Shoot the messenger
What do you get when you read 15 or so research reports and only one has anything slightly positive to say about the PC industry? You get a negative article. And I take my lumps.
"It's amazing how myopic most analysts are. There is still much growth left in the PC sector- and you chose to focus only on the negative leaves one disturbed!" one reader wrote.
Well, the PC blowout was disturbing, especially if you owned shares of Dell (Nasdaq: DELL), Compaq (NYSE: CPQ) or Gateway.
Our irate reader pointed out that the PC markets in Japan, China, Europe and Russia were far from being saturated. And she's right. But how long will it take to cultivate a market in Russia?
As she was making her pro-PC points, she reckoned there will be an upgrade cycle in 2002 or so. Well, that's a long time to wait. She also noted Dell at $20 was priced like a bankrupt company. Not quite. Despite a dreadful year, Dell still has a market cap of $50 billion as of market close Thursday.
Kumar vs. Brocade: Round 54
You'd think USB Piper Jaffray Ashok Kumar would just move on with his life after Brocade (Nasdaq: BRCD), a storage area networking company, continues to show him up.
So what did Kumar do after Brocade's big upside surprise and rosy outlook?
He kept his "neutral" rating and threw a few jabs.
"Brocade has facilitated growth in SANs by providing plumbing with the right set of features, but it is not evident that Brocade technology is considered strategic by their OEMs," said Kumar in a report.
Kumar maintains that Brocade will lose its edge in fibre channel technology and its customers will eventually bail because of interoperability problems. While noting Brocade's execution is good, the company's success is due to the failure of its competitors.
On a technical basis, the stock has broken down and Kumar said he didn't believe "the bottoming process will be complete till it retests the lows of spring ($80-90)."
Hmmm. Shares of Brocade closed up 9 percent to $168.TDAIN
• Wall Street gives up on PC stocks
• Intel's quarter 'not in the bag'
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