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Friday, January 16, 2009

Intel (INTC) still expensive, still rigging margins

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ThinkEquity calls it the kitchen sink quarter and expects 2H09 margins to be 50-60%.

The Skew: Yes, 1Q:09 is intended to be the kitchen sink quarter. The trajectory of a recovery remains uncertain. The company is going to bomb pricing. The only thing keeping $30 Atom chips from the larger form factor notebook market is Intel's restrictive sales policies – they're impeding the price curve to try to keep pricing of Centrino 2 from tanking. Intel estimates are going to be about 50 cents for 2009 now – what do you want to pay for a company making 50 cents that hasn't grown in the last 4 years? Now what do you pay for that company if sales drop 30%? Is the answer really 28 * 2009 estimates? It shouldn't be. I'd say even at 20* you're overpaying and that's down 35% from here. Definitely not a buyer of Intel.

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