Murder's Row Hits Bottom YHOO, AMZN, EBAY, INTC, MFST, DELL, GOOG, AMD
The old champions of the tech era almost all made 52-week lows last week. Intel (INTC). Amazon (AMZN). EBay (EBAY). Microsoft (MSFT). And, Dell (DELL).
Was it something in the water, or perhaps the market has turned its back on the group in favor of the likes of Google (GOOG).
Most of the companies suffer from the same set of malaise to hear Wall Street chatter. The companies are not growing fast enough. Innovation has gone elsewhere. The business models are tired.
Perhaps not. Intel's stock has gone from $28.84 to $18.00 over the last year. But, the company is hardly a dog. Revenues rose from $30.1 billion in 2003 to $34.2 billion in 2004 to $38.8 billion in 2005. Operating income moved up at a similar pace to hit $12.1 billion last year. Granted, the top line fell in the quarter ending April 1 after three strong quarters ending the 2005 year. However, the company still posted operating income of $1.7 billion. The resurrection of Advanced Micro Devices (AMD) and its new alliance with Dell has Intel investors running for the doors. But, according to Forbes, Intel "will likely be more competitive in dual-processor servers with its Woodcrest chip, due for launch in the third quarter". Intel continues to have the dominant share, by a mile, of the PC chip market, and its forward PE is only slightly above 15 according to Yahoo!Finance. Perhaps a year from now the shoe will be on the other foot for AMD and Intel.
EBay has also come back to earth, with an astonishing drop from a 52-week high of $47.86 to just above $29. That has effectively knocked out $26 billion in market capitalization. EBay's growth over the last three years has also been impressive. Revenue was $2.2 billion in 2003, $3.3 billion in 2004, and $4.6 billion in 2005. Operating income last year was $1.4 billion. The quarter ending March 31 was up from the immediately previous quarter, with revenue hitting $1.4 billion. Operating income dropped slightly to $323 million. EBay recently made important progress in a patent lawsuit. And, it certainly remains to be seen if EBay's customers will flee by the millions to the new Google Base service. With a forward P/E of 23, and the dominant share of the online auction market, the shares are hardly risky.
Amazon has dropped from $50, on a 52-week basis, to just above $33 taking over $6.5 billion in market cap with it. But, wait. Amazon's revenue grew 61% from 2003 to 2005, reaching $8.5 billion. And, the company trades at only 1.6 times sales. Amazon's first quarter sales were up 20% to $2.28 billion and free cash flow is also up 20% to $501 million for the trailing twelve months. The company also guided that revenue should grow 16% to 24% for the second quarter compared to a year ago. With new initiatives like Amazon-branded consumer electronics devices and movie downloads, the company may well still have a long way to grow.
There may be a negative case to be made for all of these aging tech giants. But, most still lead all competitors in revenue, market share, and balance sheet strength. A 52-week low is not where they belong.
Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He is also the former president of Switchboard.com, which was the 10th most visited site in the world at the time, according to MediaMetrix. He has been chief executive of FutureSource LLC and On2 Technologies, Inc. and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. He can be reached at douglasamcintyre@gmail.com.
Was it something in the water, or perhaps the market has turned its back on the group in favor of the likes of Google (GOOG).
Most of the companies suffer from the same set of malaise to hear Wall Street chatter. The companies are not growing fast enough. Innovation has gone elsewhere. The business models are tired.
Perhaps not. Intel's stock has gone from $28.84 to $18.00 over the last year. But, the company is hardly a dog. Revenues rose from $30.1 billion in 2003 to $34.2 billion in 2004 to $38.8 billion in 2005. Operating income moved up at a similar pace to hit $12.1 billion last year. Granted, the top line fell in the quarter ending April 1 after three strong quarters ending the 2005 year. However, the company still posted operating income of $1.7 billion. The resurrection of Advanced Micro Devices (AMD) and its new alliance with Dell has Intel investors running for the doors. But, according to Forbes, Intel "will likely be more competitive in dual-processor servers with its Woodcrest chip, due for launch in the third quarter". Intel continues to have the dominant share, by a mile, of the PC chip market, and its forward PE is only slightly above 15 according to Yahoo!Finance. Perhaps a year from now the shoe will be on the other foot for AMD and Intel.
EBay has also come back to earth, with an astonishing drop from a 52-week high of $47.86 to just above $29. That has effectively knocked out $26 billion in market capitalization. EBay's growth over the last three years has also been impressive. Revenue was $2.2 billion in 2003, $3.3 billion in 2004, and $4.6 billion in 2005. Operating income last year was $1.4 billion. The quarter ending March 31 was up from the immediately previous quarter, with revenue hitting $1.4 billion. Operating income dropped slightly to $323 million. EBay recently made important progress in a patent lawsuit. And, it certainly remains to be seen if EBay's customers will flee by the millions to the new Google Base service. With a forward P/E of 23, and the dominant share of the online auction market, the shares are hardly risky.
Amazon has dropped from $50, on a 52-week basis, to just above $33 taking over $6.5 billion in market cap with it. But, wait. Amazon's revenue grew 61% from 2003 to 2005, reaching $8.5 billion. And, the company trades at only 1.6 times sales. Amazon's first quarter sales were up 20% to $2.28 billion and free cash flow is also up 20% to $501 million for the trailing twelve months. The company also guided that revenue should grow 16% to 24% for the second quarter compared to a year ago. With new initiatives like Amazon-branded consumer electronics devices and movie downloads, the company may well still have a long way to grow.
There may be a negative case to be made for all of these aging tech giants. But, most still lead all competitors in revenue, market share, and balance sheet strength. A 52-week low is not where they belong.
Douglas A. McIntyre is the former Editor-in-Chief and Publisher of Financial World Magazine. He is also the former president of Switchboard.com, which was the 10th most visited site in the world at the time, according to MediaMetrix. He has been chief executive of FutureSource LLC and On2 Technologies, Inc. and has served on the boards of TheStreet.com and Edgar Online. He does not own securities in companies he writes about. He can be reached at douglasamcintyre@gmail.com.
posted by douglas mcintyre at 11:36 AM
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