Intel (INTC, news, msgs) ignited an intergalactic stock fest Tuesday night after winning at beat the number. That its earnings victory was pretty much an open secret on Wall Street before the announcement -- though the extent of smoke blowing and arm waving on the accompanying conference call wasn't -- didn't stop folks from celebrating as if it were one of the greatest achievements of the past couple of decades.
In Santa Clara, typically sunny and clueless
Aside from a bigger-than-expected pop in revenue (due to an inventory snapback) and thus a rise in non-GAAP earnings, Intel had nothing that spectacular to report. (For a look at the company's numbers, click here.)And, except for a few chip vendors, its success doesn't really imply anything for anyone else, including Dell (DELL, news, msgs) or Sun Microsystems (JAVA, news, msgs), both of which pre-announced quarterly results 48 hours before Intel's report.
Why do I say that? Because, as I have noted repeatedly, given Intel's position at the bottom of the technology food chain, it's routinely fooled about what will happen next. That is why Intel has pre-announced so regularly over the past decade, updating off-target forecasts just ahead of its earnings reports.
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Why I prefer Microsoft
In a note of irony: While folks were busily extrapolating Intel as good for the entire tech sector last Wednesday, the chip maker's stock was initially up twice as much as Microsoft's (MSFT, news, msgs), percentage-wise. Although the two businesses aren't exactly the same, they are similar. And Microsoft's business is far, far superior.That's why tech bulls' rabidity for hardware in general versus Microsoft strikes me as rather mindless, especially when one takes valuation into account, as all investors should. (Microsoft publishes MSN Money.)
Putting money behind that view, as I noted in my daily column on FleckensteinCapital.com, last Monday I added to my Microsoft position when the share price backed off toward $22. I felt that Microsoft had too much promise versus its valuation to have kept my position at its prior modest level.
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Where will the jobs of the future be?Millions of jobs have been lost since the recession began. Christina Romer of the Council of Economic Advisers discusses the skills and training that are likely to be needed going forward.
The jobs equation
Now for a wide-angled turn, we'll switch topics from the playground of speculators to the plight of unemployed Americans. In the broken-record department, the biggest problem besetting the economy is our inability to create jobs, due to having spent the past decade and a half trying to speculate our way to prosperity. (Read last week's "Why creating jobs is so hard.")The problem was laid out succinctly by New York Times columnist Bob Herbert on July 10 in a terrific (but downbeat) article titled "The human equation":
"The crisis staring America in its face and threatening to bring it to its knees is unemployment. Joblessness. Why it is taking so long -- seemingly forever -- for our government officials to recognize the scope of this crisis and confront it directly is beyond me."
Continued: A sobering conclusion
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