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Intel results exhibit signs of dysfunctional, self-mutilating market

Bolaji Ojo
7/14/2010 07:16 PM EDT

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Milcara
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re: Intel results exhibit signs of dysfunctional, self-mutilating market
Milcara   7/16/2010 2:22:33 PM
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Mr Ojo Great article. Many have tried and will continue to try and predict / forecast business cycles. It is futile of course but "money is to be made" so to speak so it will continue. Suggested reading for all regardless if simply an investor (I think almost all are in some fashion), analyst or employee - - check out "Black Swan" by Nassim Nicholas.

kari
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re: Intel results exhibit signs of dysfunctional, self-mutilating market
kari   7/15/2010 9:15:56 PM
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Does anyone knows why everything; economy, Corporate world, decision making, governments, industries etc. seem to have become disfunctional. I hope we the humans are not in line. May God's grace be always with us all. If some one knows please let me know. It will help me a lot because knowledge is always bliss. Thanks

bolaji.ojo
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re: Intel results exhibit signs of dysfunctional, self-mutilating market
bolaji.ojo   7/15/2010 9:02:17 PM
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Any1, That's right. All these companies are sitting on a boatload of cash and doing minimal hiring. What will they do with the cash? I'll be exploring this next.

any1
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re: Intel results exhibit signs of dysfunctional, self-mutilating market
any1   7/15/2010 7:21:55 PM
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I'm sure a well run company like Intel does have long term (whatever that means these days) strategy and planning. However, another trend is that market volatility is increasing. Many factors are driving this trend, and I don't see it getting any better - only worse. Demand for most products that contain semiconductors is highly elastic. Electronic product lifetimes are getting ever shorter. That "must have" cell phone of today is obsolete tomorrow. And they have no idea what global macro economic catastrophe could occur next that could totally collapse demand. Maybe that is one reason that despite good profitability companies like Intel seem to be sitting on ever larger cash reserves. And so the new normal global economic climate, just as predicted with global warming, will be marked by a more extreme climate - lower lows and higher highs over the short term, not a continuous gradual warming.

bolaji.ojo
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re: Intel results exhibit signs of dysfunctional, self-mutilating market
bolaji.ojo   7/15/2010 11:42:04 AM
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FH1, I agree with especially your last paragraph but why is that "hell will freeze first over before" the industry figures out how to fix its demand-supply imbalance bug? It's populated by such bright people! Are there people benefitting from this imbalance?

CamilleK
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re: Intel results exhibit signs of dysfunctional, self-mutilating market
CamilleK   7/15/2010 5:50:46 AM
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I tend to agree with jg.. Pent up demand artificially increases the growth rates, so does anticipation. Consider also the relative relationship of the base number: a 20% increase off a smaller base is not the same in absolute value and is less than a 20% decrease off a higher base number. So a decrease is worse in impact than an increase, and an increase tends to be more positively viewed than it's actual impact. Agree with author that things cannot grow indefinitely, but perhaps some can be explained away with a close look. There are more consumers with population growth, affluence of ROW, replacement cycles, subsidies, computing ubiquity in consumer space, multicores, economic stimulants and before you know it, a little here and a little there adds up to serious growth. As mentioned earlier these should be filtered out by analysts in their trending of forecasts.

FH1
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re: Intel results exhibit signs of dysfunctional, self-mutilating market
FH1   7/15/2010 4:31:28 AM
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Oh how I agree with jg but 'smart' and 'analyst' are not two words I would normally use together in the same sentence. Also goafrit's comment on 'too busy shopping' is right on the button. Also garydpdx ... yes Intel knows better than anyone their market dtnamics, but ebven threy got caught blindsided by the Q4-2008 'holding your breath' market meltdown. But it was just that, and the 30 percent market growth in 2010 is not a 'boom' as such but simply breathing out. A first big step in solving a lot of these structural issues is to break the obsession with short-term/quick buck fixes and investments and start to concentrate on the longer term trends and investment plans. Hell will freeze first over before that happens !!

jg_
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re: Intel results exhibit signs of dysfunctional, self-mutilating market
jg_   7/15/2010 1:52:36 AM
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A smarter analyst, would compare the last 3 years numbers, and not mistake a large increase, from a large decline, as a long term trend. It's because of the 'holding of breath' nature of the earlier declines, that numbers now appear good, but remember that on the longer term trend lines, they are rather less special.

goafrit
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re: Intel results exhibit signs of dysfunctional, self-mutilating market
goafrit   7/15/2010 1:14:36 AM
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The simply reason why the analysts miss the estimate is that they are still using industrial age tools to measure knowledge age tools. It is not the analyst, even the government. This is a major problem in our world now; economic and financial tool have lagged behind the market innovation. Nonetheless, Intel had a good one, but it will not last. The world is going to be frozen again because government has the market on life-support at near zero interest. The day it goes, we will come back to reality. I always tell people, forget the analysts as many are so busy with shopping to think right. The meltdown proved me right. The new business process makes it very tough for them to do their jobs, but they are lazy also not to invest in the right process to do it. Good article Mr Ojo. E enjoyed this analysis, honestly.

bolaji.ojo
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re: Intel results exhibit signs of dysfunctional, self-mutilating market
bolaji.ojo   7/14/2010 9:05:41 PM
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Gary, If only the problem was Intel-specific. This is a company that has learned to read the tea leaves and we should give them credit for this. Heck, they even raised capital expenditure during the last severe downturn in 2001. The problem is not limited to Intel, however, and it's mathematically impossible and unsustainable to keep recording double-digit growth because even the new and replacement markets will be saturated eventually. I saw the industry take steps to correct its demand-supply misalignment earlier this year and they are trying hard even now to keep production and manufacturing capacity growth in check. It still boggles the mind, nevertheless, to go from zero or negative growth to 34 percent. The industry finds this acceptable. I think it's insanity.

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