Don't Panic at the Intel Stumble -- It'll Be Back

It wasn't so much Intel INTC pain Thursday evening -- play fast/win big/lose big; that's their game -- as it was all the bloodied bystanders, most of them innocent bystanders, who were left lying on the track when the Intel Warning Express blew past the station after the markets closed.

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Dell DELL, Microsoft MSFT, Cisco CSCO, IBM IBM, Applied Materials AMAT and Hewlett-Packard HWP, all down, all whacked up the side of the head by this runaway.

I agree absolutely with Dave Kansas' remarks in the RealMoney.com Columnist Conversation Thursday afternoon, just after news of this unnatural disaster broke: "Too much gloating. It's going to be bad tomorrow."

But even more importantly, Kansas again: "Those few with great brilliance have gotten out of the way, but most folks are staring at red and wondering how they will sleep tonight. Time to take longer views, find themes that have durability -- energy, maybe? Not a time to panic ... panic leads to mistakes." Emphasis mine.

Yes, I think it's going to be bloody tomorrow. Maybe a big, big down day for the Nasdaq. It's a Friday; that's when that happens. Nazz 3500? 3450, maybe? Ugly.

If you're way out on a limb on some tech positions, time to cash out, probably. But don't go crazy because of this Intel-triggered selling.

Unlike the telco/tel-tech stocks I'll be talking about in my column early Friday morning, this stuff is going to come back.

Consider the meat of the Intel warning:

• Weaker demand than expected in Europe for Intel CPUs -- no surprise there -- and maybe a quarter-over-quarter increase of only about 3%-5% over second-quarter sales of $8.3 billion.

• Gross profit margin around 62%, down from the 63%-64% of Intel's earlier guidance.

That's it. And that doesn't equal a 20% drop.

Consider that if the overnight bloodletting bottoms out around 49, that puts Intel back where it was, split-adjusted, in late January, and still up about 20% for the year. Not much consolation, I know, if you bought in, say, late August, in the mid-70s, but worth considering.

Even more, do you really think Intel is a $49 stock? Or that the price is going to be in the $40s in a couple of weeks? Not me: I suspect it will recover to the upper $50s pretty quickly, and into the $60s -- where it opened Thursday -- within six or seven weeks.

In other words, if you're an investor, not a trader -- if you have a chunk of your 401(k) or your kid's college fund tied up in Intel -- this is a stupid time to sell.

Remember Kansas' words: "Not a time to panic ... panic leads to mistakes."

Amen.

Elsewhere? Cisco down 7% and Dell down 11% (last time I looked) were the most egregious Intel-fallout losers. This Intel warning just doesn't reflect that much bad news for either. Cisco's going to keep pumping out those routers, and Dell's going to keep pumping out those notebooks and servers.

I don't think you're going to see either reporting lower unit sales. Or at least, drops that are even remotely related to their stock-price declines Thursday night.

They're going to recover, too. (But do read what I have to say about Cisco and its tel-tech cohorts in Friday morning's column.)

Some advice is almost impossibly hard to follow -- and here comes some of that -- but if you're a mid-to-long-term investor with a position in these three stocks, don't turn on CNBC Friday. Ignore the panic. Refuse to play. Maybe next week, too.

It's a fool's game. Or a trader's game. Take your pick.