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For years, I have been a fan of Intel (NASDAQ:INTC). I used it as a model of innovative company in my Business Strategy seminars. I raved about the stellar performance of its stock in my investment classes. I traded its shares on the long side of the market.
Recently, however, I have been disenchanted with the company and its equity performance. Though it continues to be an innovative powerhouse, it seems to have missed out on the transition from a PC to a mobile devices world. Perhaps, Intel has been too busy following its long partner Microsoft (NASDAQ:MSFT), which has also missed out this transition. This morning, Intel lowered its 3rd-quarter revenue guidance by 7.7 percent, citing a “challenging macroeconomic environment.” Does this statement ring any bells?
If my memory is correct, that’s the statement Cisco’s (NASDAQ:CSCO) CEO John Chambers used in the early 2000s to describe a slow-down in the company’s growth in the aftermath of the Dot.com crash. The trouble, however, is that ten years later the Dot.com crash is distant memory, but Cisco has yet to regain its growth momentum. This confirms that Cisco’s problem wasn’t macroeconomic but microeconomic, as I discussed in a previous piece.
To be fair, Intel, is, indeed, facing a sluggish world market environment at this point, especially in Europe, which is in a recession. The same is true, however, for Apple (NASDAQ:AAPL) and Qualcomm (NASDAQ:QCOMM). Yet the two companies are thriving, especially Qualcomm that cannot produce fast enough because they ride the right trend—they are in the right business at the right time. Intel has been trying to catch up, but not fast enough.
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