Is Intel at a bottom?
The stock hit a 52-week low today as it fell for an 8th straight day. The stock is down 29% since May. It may be nearing a bottom -- if you believe Intel has a future in mobile technology. Right now, investors aren't so sure.
Here's the problem with Intel (INTC).
Since the end of April, it has been the second-worst performer among stocks in the Dow Jones Industrial Average ($INDU) after Hewlett-Packard (HPQ) and only 88th among stocks in the Nasdaq-100 Index ($NDX).
The stock has fallen for eight straight days and nine of the last 10. It has hit 52-week lows every day for the past five days, including Tuesday, when it hit $20.18. It closed at $20.28, down 48 cents. It was rising after hours.
Does that mean it's close to a bottom?
It's not clear, which may be why one should watch the stock carefully. The stock is flirting with falling below $20 for the first time since September 2011, and the chart of the stock suggests little support at that level. There is support, however, at $19.
Intel is suffering all sorts of, well, insults. It's no longer the world's most valuable semiconductor manufacturer. That title now belongs to Qualcomm (QCOM), whose market capitalization is now approaching $107 billion. Intel's market cap is $102 billion.
Qualcomm's ascendancy is one reason why Intel shares are struggling. Qualcomm makes chips used in smartphones. It has designed much of the technology that defines mobile telephony.
Intel is still struggling with personal computers, whose sales are falling so fast that Apple's (AAPL) iPad is now the dominant player in mobile computing.
Notebook computer production is apparently going to be flat in the fourth quarter compared with the third quarter. The industry had been looking for 5% to 10% growth.
Sales of Ultrabook computers are apparently weaker than expected, according to a research note by chip analyst Joanne Feeney of Longbow Research. Ultrabooks are slim and light notebook computers that Intel has been promoting among its manufacturing partners.
MarketWatch reported that Barclays analyst Ben Reitzes expects PC sales to fall 3% this year, down from an earlier projection of flat growth. Next year, PC shipments are seen slipping 4% year over year, worse than an earlier projection for a 1% decline.
"The consumer market remains weak and the tablet and smartphone markets continue to cannibalize the PC market; the iPad mini, new iPad and the iPhone 5 could continue to take wallet share," Reitzes wrote.
And Feeney noted that there's talk that Intel and rival Advanced Micro Devices are discounting prices to manufacturers.
Also pressuring the stock: Media reports last week said Intel chips may be dropped from Apple's line of Macintosh computers within the next few years, with Apple-designed chips taking over. Apple started using Intel's processors in its Macs seven years ago.
To be fair, Intel is not going away. It's working on new chips to compete better in the smartphone/tablet market. And it remains a terrifically profitable company; its gross profit margin is above 60%. It has only $7 billion in debt against assets of $71 billion.
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