Well Intel sure put the cherry on top of this disaster!
Everyone's favorite chip company reported Q4 earnings of $0.405 per share, if you exclude a $0.025 charge, vs. the $0.40 per share expected, with revenues up 10.5% to $10.7Bn for the quarter falling $100,000,000 shy of the $10,800,000,000 expected by most analysts. The company also reported Q4 gross margins of 58.1% vs. the 57.2% expected and predicts Q1 '08 margins way down at 56%, only 0.03% better than expected. Revenue guidance is "between $9.4 and $10Bn" vs. $9.97Bn expected by analysts (who are, of course, never wrong).
Cue Greek Chorus: "We MUST crucify them! Crucify them, crucify them…." OK, maybe a reference to Jesus Chirst, Superstar is a little obscure for middle America but COME ON PEOPLE – a 14% sell-off after hours? On September 17th, 2001, after Terrorists hijacked 4 planes and destroyed 2 New York City office buildings and flew right into the Pentagon… On a day when we though there was a possibility they would nuke an American city any moment, on the heels of an already nasty market correction… Intel dropped from $26.07 to $24.26 (7%). I'm pretty sure if you had asked them that morning they would have lowered their guidance just a bit.
A week later Intel fell all the way to $18.96 but was back in the mid $30s on Dec 4th as it turned out the world wasn't going to end. You would think things are much worse now than they were then because banks made some bad loans and the economy's slowing wouldn't you? Back on 9/11 Bush came on TV THAT NIGHT and said:
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These acts of mass murder were intended to frighten our nation into chaos and retreat, but they have failed…
- Our country is strong, they can shake the foundations of our biggest buildings but they cannot touch the foundation of America.
- America was targeted because we're the brightest beacon for freedom and opportunity in the world, and NO ONE will keep that light from shining.
- IMMEDIATELY after the first attack, I implemented our government's emergency response plans… Our first priority is to get help to those who have been injured and to take every precaution to protect our citizens at home and around the world from further attacks.
- Our finanical institutions remains STRONG and the American economy will be open for business as well.
- We stand together to win the war against terrorism.
Just 4 days later, Congress approved a $40Bn emergency spending package 420-1 with the lone dissenter, Rep. Barbara Lee of California, saying she believed it gave too much of Congress' power to the President and because she was reluctant to approve force that could worsen the situation. "I am convinced that military action will not prevent further acts of international terrorism against the United States," she said in a statement. "Finally, we must be careful not to embark on an open-ended war with neither an exit strategy nor a focused target." Kudos to Ms. Lee in retrospect, but the point is that we CAN act quickly and decisively in a crisis.
4,000 people died in the World Trade Center and another 4,000 troops have lost their lives fighting that open-ended war with neither an exit strategy nor a focused target, but 7,000 families (21,000 people) EACH DAY are losing their homes in this snowballing financial crisis and this President now sits here like some kind of lame duck.
Back to Intel, my point is that this is a relatively minor and solvable crisis compared to International terrorism, which the government has already spent $1.3Tn fighting in a war that is currently costing us $275M a day, enough money to give each of those 7,000 families that are being foreclosed a $39,000 check! Add that to the impact of having almost 250,000 troops and support people in Iraq and Afghanistan, effectively removing 1/4 of a percent of this nation's head-of-household consumers (and using 400Kb of oil a day for the military!) and you can imagine the economic damage…
While the terrorists may have failed to frighten our nation into chaos and retreat on 9/11, just 6 years later the Bush/Bernanke/Paulson team has managed to do just that to our financial markets with their massively inept handling of last week's speeches that certainly left investors wanting more. Actually ANYTHING would have been an improvement over the empty platitudes we were given! For whatever reason, this administration has fostered a crisis of confidence in the markets and Intel is just our martyr of the moment – the mob wants blood and any blood will do.
