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Intel Corp. posted second-quarter revenue of $13.5-billion and net earnings of $2.8-billion, or 54 cents per share, on July 17, 2012, as the personal computer industry wrestles with troubled economies and consumers shift toward tablets. (Steve Marcus/Reuters)
Intel Corp. posted second-quarter revenue of $13.5-billion and net earnings of $2.8-billion, or 54 cents per share, on July 17, 2012, as the personal computer industry wrestles with troubled economies and consumers shift toward tablets. (Steve Marcus/Reuters)

Schizas’ Mailbag

Intel Corp. struggling with a downtrend Add to ...

Hi Lou,

Is it a good time to buy Intel?

Thanks,

William

Hey William,

Intel Corp. has run into some challenges recently as the demand for personal computers has weakened. Mobile devices such as smart phones and tablet computers have become the go-to platform for individuals and organizations putting pressure on the stock. The company has yet to determine how to manage the change given that the shift in the market place threatens their business model.

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Intel has traditionally designed a chip that they manufacture and make available to the market place at a price that generates sufficient profit to fund the next generation of chips. The ARM architecture that drives the chips used in the majority of smart phones and tablets allow for customization and manufacture by independent chip foundries which is not a space that INTC wants to occupy. It looks like a case of trying to park a Cadillac into a garden shed. It just will not fit!

That doesn’t mean that INTC is road kill but management will have to find a way adapt its business model to the current environment.

A review of the charts will provide some details as to trend, support, and resistance on this stock.

The three-year chart indicates that the uptrend was over as the shares topped out at the 52-week high of $29.03 on May 3, 2012. The stock breached the uptrend line shortly thereafter and then broke support at $27.00 and by August melted through support at $25.00 on its way to its 52-week low of $21.22 on Oct. 19, 2012. Also worth noting is the death cross that surfaced late August that set the pace of selling on frenzy!

The six-month chart provides a close-up of the sell signal generated by the MACD in August which would have saved investors from taking a substantial hit to their invested capital. Currently there are no indications that the downtrend is about to reverse itself or that a trade is setting up for a long or a short. There is support at $21.00 and below that at $20.00. The dividend yield is 4.187 per cent so there is income to consider but remember that the best time to buy a stock is when it is going up.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it to lschizas@globeandmail.com.

 

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