"One consideration, not widely discussed, is that prices are coming down due to more than just a 'price war' with AMD. Investors should note that as commodity prices dropped over the last year, the cost of production at Intel and AMD has pulled back as well. This commodity price drop has given the chip giants the leeway to drop prices -- but not the ability to raise profitability," continues Mr. Harrold.
"For prices to move higher -- or for profits to rise substantially -- Intel will need to roll out products that beat the competition without a need to cut prices. Although this may read like 'Economics 101' it must be taken into consideration by long-term INTC investors who look for a higher share price for INTC stock," adds Mr. Harrold.
Mr. Harrold says, "Some analysts believe that INTC will be 'range bound' for the near term. Estimates range from $20 to $22 a share for INTC. If that range is expected, investors may see short term traders move out of INTC to find opportunities with more immediate upside. Shareholder apathy may turn to active selling if conditions do not improve at Intel in the near term."
"Ultimately, it's profit margins that excite tech investors. For the near term, INTC has its work cut out before shareholders can expect a move higher," concludes Mr. Harrold.
Don Harrold is an independent stock analyst. He does not own stock in INTC. He does not receive compensation to review INTC. Mr. Harrold adds, "I don't guarantee any stock I discuss will go up or down, I don't guarantee you'll make money, and I don't guarantee that the information I give you will get to you in time for you to make a trade (I can't guarantee your email service, for example). I suggest that all investors do their own due-diligence before making any financial decision."
Contact Don Harrold 6005 Financial Plaza, Suite 101 Shreveport, Louisiana 71105 http://www.donharrold.net Email Contact 318-219-1915