Keeping the Faith"I think people have gotten a little too bearish on Intel. I'm not buying into the thought process that we've hit a peak in terms of tech spending and we're rolling over," said Patrick Adams, manager of the ( CHLAX) Choice Long-Short fund, who is long Intel. Although plenty of smaller tech outfits have warned, Adams said some of the culprits are "second-tier" while others are in unusual circumstances that make them unrepresentative of broader tech trends. The latter category includes Veritas, whose results have been complicated by prior accounting adjustments, and PeopleSoft, which is battling a takeover bid from Oracle ( ORCL). In that light, some argue that Wall Street's conniption fit over the apparent corporate-spending pause is misguided. Sanford Bernstein analyst Adam Parker said in a recent note that international growth for Intel could offset possible weakness in the U.S., and is likely to push overall corporate growth in the second half of 2004. Sales from outside the Americas accounted for nearly three-quarters of Intel's sales in the most recent quarter. Parker, who has an outperform rating on Intel, contends that robust international PC-unit growth isn't yet reflected in Intel's stock price and could fuel further upside to 2005 expectations. It wouldn't be the first time overseas growth has given U.S. tech names a push: Back in April, Dell ( DELL) cited stronger-than-expected international growth when it raised its first-quarter revenue guidance. Demand issues aside, some investors are looking more favorably on Intel simply because its stock price has slid so much.
Based on Monday's close, the stock trades at 22 times 2004 consensus estimates of $1.22 a share and 18 times the 2005 estimate of $1.44.At that level, bulls say Intel may find it easier to scale the expectations bar now that market-watchers have lowered their sights. Fund manager Adams, for example, owns Intel not so much as a bullish call on the economy but more as a valuation play. "If this isn't a full-fledged