Intel Slides on Lower Guidance

Intel ($INTC) is getting clipped today on news that it’s lowering guidance.

Intel, a technology bellwether, said it now expected fourth-quarter revenue of $13.4 billion to $14 billion. It had previously forecast revenue of $14.2 billion to $15.2 billion for the holiday quarter.

Analysts polled by FactSet were expecting revenue of $14.65 billion.

Intel is the world’s largest maker of microprocessors, the brains of computers. The company said it expected personal computer sales to be up from the previous quarter. But it said computer makers are reducing inventories and microprocessor purchases because of hard drive shortages.

Intel has been a supremely frustrating stock for us because I’ve played it exactly wrong — or perhaps we were too early. Still, I always want to look at our bad calls to see what we can learn.

I had Intel on last year’s Buy List and it started off as a good position for us. By April, it was an 18% winner for us. The stock then dropped about 25% and recovered to make us a slight gain for the year but it still trailed the overall market.

After a lot of consideration, I felt that my original thesis no longer held and I decide to boot it from the Buy List for this year. Once again, I was right — at first. Intel underperformed the market at the beginning of this year, then around April it started a large out-performance.

The stock has beaten earnings pretty consistently for the past few years. I had even considered adding back on for 2012. But I couldn’t help feeling that Intel had over-run its value. Only today, now that 2011 is nearly over, do we see some cracks in the company’s business.

The lesson for investors is that your thesis can be right but it may take a long time to see it pay off. I remember Peter Lynch saying that his stocks did best in the second or third year that he owned them.

Posted by on December 12th, 2011 at 1:12 pm


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