Intel: Can't Have It Both Ways

Terrible Tuesday

Intel Intrigue: "All last week," Cramer wrote this morning, "I found myself defending the quality of Intel's (INTC Quote) earnings to various naysaying analysts and journalists."

That would be me!

In a column on Friday, and on "TheStreet.com" on Fox News Channel over the weekend, I questioned the "quality" of Intel's earnings because much of the amount over Wall Street's expectation came from Intel's sale of shares in other tech companies. This led to a heated exchange on the show between Cramer and me on whether an Intel investor is investing in a hedge fund or a chipmaking company.

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Saluting Intel's Foresight

Cramer's column today, Saluting Intel's Foresight, responded by saying: "Most of the journalists out there are too lazy to read the fine print, but Intel has been coining money selling puts against its stock for years and nobody these days seems too perturbed about counting that income."

Maybe so, but the money Intel was coining from selling puts against its stock was more like a rounding error (the tens of millions in any given quarter) when compared with the $327 million Intel reaped last quarter from its investment profits.

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The point, according to those flying the cautionary flag, is that Intel can't have it both ways. Nobody is disputing that Intel isn't pouring tons of money into research and development in an effort to make a great company even greater. (That is, if all goes well.) What is being disputed is the quality of the earnings Intel used to beat estimates. Sure, Intel gets credit for the company it's trying to build. But the issue here is that Wall Street has created a game of quarterly expectations, and when you break down the numbers, the quality of Intel's earnings -- by that I mean the amount by which it beat the Street's expectations -- was mediocre, at best.

What's more, if Intel is now as much an investment fund as it is a chip company, then investors had better brace themselves for the possibility of the flip side: If tech stocks ever tumble, there may not be enough gains (apropos to Intel's guidance) to help out Intel's earnings. And that could result in an earnings miss! And the lower Intel's earnings go -- well, it's the bellwether, so you figure it out.

Finally: This column will take a few days off in honor of my father, David, who died Monday. He was 85. For the past three years, he had been sidelined by a weak heart and the grueling requirements of every-other-day dialysis. Yet he barely complained. Then again, complaining was never his style. His style was living a simple, quiet and kind life. His style was working hard. His style was caring for his wife, his children and his grandchildren. David Greenberg leaves a legacy of integrity, decency and everything that is right about mankind. He was one of the good guys!

So long, Dad.