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Managing Expectations into Intel Earnings

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The leaders of yesterday are not the leaders of tomorrow.

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With all due respect to Alcoa's (AA) tremendous public relations team, earnings will 'officially' arrive tonight when Intel (INTC) offers its take on the state of the world.

As analysts furiously sharpen their #2 pencils and prepare to note every shift in tenor or change in tone, I'm reminded of one of our favorite Minyanville axioms, "The leaders coming out of a crisis are rarely the same as those who enter it."

While I've shared that thought the last few years in an effort to "look up and out (at opportunities) rather than down and back (at what was)," the Mother Chip encapsulates that dynamic. Take a look at the chart below, which tracks this industry-leader over the last decade, and you'll find that the stock has traded at $20 every single year, save 2005.


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What about the other stocks that comprised the once-famous four horsemen? Dell (DELL), the PC-industry leader when people actually computed at a desktop or (gasp!) cut the edge with a laptop, steadily traded between $20 and $30, with the exception of 2004 and 2005 when it briefly sniffed higher.


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Cisco (CSCO)? Glad you asked. John Chambers -- once famous for his "show me economy" guidance that didn't see the bubble coming or ending -- and the networking giant has steadily slinked at the $20-level, although the stock exhibited slightly more volatility, with a few pokes to $10 and $30, respectively.


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And Microsoft (MSFT)? Yep, it's flatlined the last ten years, which could explain why Steve Ballmer has such persistent perspiration issues. But alas, that's a different conversation and an entirely stickier situation!


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The point of this column is two-fold. First, chill -- Intel surely "matters," but it's not the stock it once was. In fact, it has a scant 2% weighting in the NDX, and while there will be extrapolation up and down the food chain, the vehicle in and of itself remains crowded.

Second, if you're still trafficking in yesterday's darlings -- be it Intel, Citigroup (C) or other relics of the glory days, take some time to identify where the puck is going, for those properly positioned won't just be the leaders, they'll be the top performers.

For much more on INTC, CSCO, MSFT and the full tech universe, I highly recommend you take a free peek at our new TechStrat Report by Sean Udall. He's a smart cookie and has been ALL over the tech moves the past few years.

R.P.
No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at todd@minyanville.com.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

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