Parchayi.com – Personal Finance Simplified

Let’s start with the disclaimer that I own Intel Stock. After this acquisition, which I will try to fathom as I write this post, the stock is back down below the dismal level I bought it at. When I bought the stock it was with the thinking that “it can’t go lower than this” and for a while it hasn’t. Until they overpay for a company that makes a mediocre product.

I can see geeks joking everywhere that Intel bought McAfee because the bloatware that McAfee sells is second biggest driving force for CPU upgrades after Windows. And CPU upgrades are good for business at Intel. But the real reason might just be one or more of the following

1. Diversification. Intel wants to move up from just being a hardware company, maybe?
2. Some future in-processor security mechanism. However McAfee is not a great acquisition for that purpose. They could have bought out one of the smaller players if it were just for the security aspect. A combination of 1 and 2 is more likely to be the driver.
3. They think adding McAfee will improve profitability down the line. McAfee has revenues of $2 billion and growing with margins of 80%. But I don’t see any common ground here where the acquisition will save costs. So either McAfee was seriously undervalued or the deal will bring major improvements to something Intel has in the pipeline.

As an investor I’m not exactly sure this is a good thing. It might be but I’m skeptical. I would have been much happier if they would have bought some smaller security vendor and thrown the Intel weight behind that to get people to move away from McAfee/Symantec instead. Intel spent more than half it’s cash on this deal. Maybe their headquarters being a stone’s throw away makes it easy to merge and form Intelton, CA.

Whatever it is, hopefully this foretells less malware in our future?

The Nasdaq is up almost 50% this year while the Dow is up almost 20%. Tech stocks are reporting stellar earnings with Intel, Microsoft, Amazon, Apple, Google amongst others all beating estimates.

If the trend continues, 2009 will really be the year of the tech stock. And it isn’t even really that much of a bubble. Many tech stocks have non stellar P/Es. They are still higher than the S&P average but maybe justified considering the performance. INTC had a dismal last year which drove it’s trailing P/E to around 50. But now it seems to be back on track and has a forward P/E of only 13.5! Google has a forward P/E of about 24, Apple about 26. Amazon has the highest amongst the P/E ratios at 46 but as long as the recession continues, Amazon will probably continue to beat expectations as more shoppers turn to online shopping for more items.

Walmart.com, my new favorite destination for online shopping with free site to store shipping and prices that often beat Amazon, even after tax and the simplicity of returning to store, great customer service also can’t seem to affect the Amazon juggernaut much.

Windows 7  is selling like hot cakes and if Windows Mobile 7 is even a thousandth as successful as Windows 7, we should see Microsoft making some headway into the Mobile market. Really the best phones are either running Android or Windows Mobile and the current iPhone has nothing on them except the App Store. Expect both Android and WinMo to catch up quickly.

What can I say, if you can stomach the risk, wait for the excitement of  the current quarter die out and get some tech stock for yourself during holiday season.

Disclaimer: Parchayi and me own AAPL, INTC and GOOG stock.

Intel and Google, both companies that I own stock in, both recently reporting. Intel reported spectacular results on Tuesday (as compared to analyst estimates and the previous quarter, still below last years results). Intel also upped it’s guidance. Positive news from Intel lifted the market up.

Google was the next to report and even though Google made it’s biggest profit ever, growth was the slowest ever. Google also had some fewer employees than last year. Also Google’s profit was more a result of shaving off expenses and not from increasing revenues. This was a disappointment that dragged Google stock slightly lower.

Apple (I own and the stock is finally approaching my average buying price), Microsoft (don’t own) report next week. Positive earnings are expected from Apple and the stock is hitting new 52 week highs. Micrsoft, not so much even though Windows 7 might cause an upgrade cycle.

In any case, some good some bad, overall the picture is neither good nor bad. Just so so. Personally my expectations are for tech stocks in general to be sideways or slowly go upwards. I have been wrong before and I probably wil be wrong again but I just don’t have very high expectations in the near future from the market overall. Next year might bring some better news?