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Intel’s 2nd Quarter

July 14, 2010


Intel’s (INTC) 2nd quarter came in at $.51, well above street estimate of $.43. Gross margins exceeded expectations at 67.2% versus 64%e. We are encouraged by management’s increase in guidance for the 3rd quarter despite the fact that inventories grew 12% quarter to quarter.
Company will benefit from the following areas:
1. Rebound in IT spending.
2. PC growth in emerging markets.
3. Increase in higher margin products.
In our opinion, this company continues to remain undervalued based on its ability to grow earnings and a superior balance sheet. Even if the stock traded at a market multiple for 2010, it would be worth $25.80 or a 22% increase from current price.

Blowout Quarter for ITW

April 21, 2010


1. On 4/20, ITW reported 1st qtr eps of .58 versus a $.21 in 2009 (from continuing operations). Consensus was looking for $.57.
2. Most importantly, revenues were up 14.6% from last year’s quarter. I was impressed to see that North America’s base revenues were up 7.1%, lending credibility to the fact that we are in a recovery phase in the U.S.
3. Operating margins increased 1050 basis points to 13.4%.
Two industries we have been talking about in our blog, autos and PCs, were strong drivers for the quarters eps. Transportation +35.6%, PC board fabrication business +89.4%!
Now, for the words we all want to hear, management is raising guidance for 2nd qtr to a range of $.74 to $.86. Full year is being guided upwards to $2.72 to $3.08.
We continue to like this stock.

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