On December 9, 2013, Kiernan Ray, of Barrons Online published an article Intel: Expensive on Free Cash Flow, PC Trends Still Poor, Says Morgan Stanley. In this article, Mr. Ray summarizes some points made by Mr. Joseph Moore about Intel. Mr. Moore is an analyst at Morgan Stanley who covers semiconductor manufacturers.
I disclose I have bullish investments in Intel.
I took issue with a couple of the points Mr. Moore made, at least as Mr. Ray summarized them. The most important of these was his comment that Microsoft’s decision to terminate support for Windows XP was actually a primary driver of an uptick in PC sales. I think the uptick in PC sales has more to do with the improvements Microsoft has made in Windows 8.1, together with substantially lower product prices offered consumers by its OEMs (as the result of the economies represented by Quad Core Chipsets on the new Haswell circuits), than it has to do with the demise of Windows XP.
But as I researched Mr. Moore’s background, online, I came on another article authored by Eric Savitz, this time published on the Forbes website, with a date of May 30, 2012 titled Intel: Morgan Stanley Launches Coverage at Underweight.
The thrust of both articles are substantially the same, at least as I read them. Whether we’re back in the summer of 2012, or approaching the new year at the end of 2013, the predictions are the same: Mr. Savits, in the Forbes article summarizes Mr. Moore’s position as ” . . .[Intel] will see minimal earnings growth through 2014 as prices flatten, unit growth slows and costs rise.”
Fast forward to December, 2013. Mr. Ray summarizes Mr. Moore’s reiterated position as an ” . . . [u]nderweight rating on shares of Intel (INTC), which may see some positive news flow from the uptick [in PC sales], but is still dealing with long-term uncertainty about its business . . . ”
To reiterate: there has been little change, if any, in Mr. Moore’s position in over 1.5 years on this business. It would have benefited Mr. Ray’s article had he set this historical stage for readers, rather than characterizing Mr. Moore’s position as anything new whatsoever.
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