Rosensweig: Intel Sell-Off 'a Buying Opportunity'
BILL HEMMER, CNN ANCHOR: A revenue warning from Intel, the world's largest computer chipmaker, has helped to ignited a high-tech sell-off on world stock markets. Joining us now with more on that and what it means for investors is Jeff Rosensweig, associate dean at Emory University's Goizueta Business School here in the city of Atlanta. Good morning to you, Jeff. Thanks for coming back. Are we buying Intel at this point?</s>JEFF ROSENSWEIG, GOIZUETA BUSINESS SCHOOL, EMORY UNIVERSITY: We're buying. In fact, as you know, it got as low as 46 this morning. A minute ago, I just checked your monitor, it is 49. What a buying opportunity. Always own great companies, but get them cheap.</s>HEMMER: What do you think about the ripple effect? When you talk about Intel right now, the impact after the markets yesterday, what we saw overnight in Asia and Europe, and now here in the U.S. What's your take?</s>ROSENSWEIG: The ripple effect is not very strong in this case. My biggest stock holding, as I pointed out to people on this network, is Nokia. Everyone thought companies like Nokia or Ericsson would be down. They are already up. It's just great companies out there. What the investor has to do is watching this show is take a longer term perspective and say: Let's own great companies. This is what Warren Buffett says, take your time. If you see a Home Depot fall in to the 40s that's a tremendous buying opportunity. If you see Intel where it is right now, it is an opportunity. Own good things, but wait until you get them cheap day, and today is a cheap day for one.</s>HEMMER: I think one thing to really point out here that is important is that Intel says in the third quarter, revenue is going to be down about $500 million, which is a lot of cash. However, in the third quarter, they are still going to make $8.5 billion. I mean, this is a company that is not going to go into debt or bankruptcy?</s>ROSENSWEIG: Well, what is interesting is that they lost $80 billion of market value, as you say, for a few million of under -- That's what makes it a buying opportunity. They're going to lose about 6 cents of profit. And they lose a quarter of their value. More importantly, as you know, this morning, the three big central banks have come together to say: Let's raise that euro, the U.S. dollar is getting too strong. That's where you would see the ripple effect. If the U.S. dollar gets too strong, all the great American companies that sell into Europe are very disadvantaged. So I think our leaders did the right thing, Larry Summers at Treasury said: Let's not let the dollar get so strong that our stuff looks expensive in Europe. So Intel was a good warning shot over the bough, saying a great company. Because they are only hurting in Europe, that whole $500 million is Europe. What I am saying is, we're already taking the policy action we need so there could be some buying opportunities in the great U.S. global companies that you feel can project their brand globally.</s>HEMMER: Want to get some e-mails right now, some viewers writing into us. We want to get to those right now. First one up here now: "Has anyone considered the impact of Intel's latest product acceptance? For example, Pentium 3 and above..." That from Terry in Melbourne, Florida. Is this product specific with Intel?</s>ROSENSWEIG: It is not product specific. It is actually more Europe specific. It is true that Intel faces increased competitors and they are also trying to figure out what to do about the Internet, like everyone else is. On the other hand, just like when Bill Gates started worrying about the Internet, I don't think you want to bet against an Intel.</s>HEMMER: Another e-mail right now: "What obligations now" -- just reading it off the screen -- "What obligations does Intel have with Rambus and how is this affecting their profitability? Is this something you can shed light upon?" What do you think?</s>ROSENSWEIG: As you pointed out, Intel is about the most profitable firm in the world. Another set of stocks that are up today are the pharmaceuticals companies, and that is interesting because they make great profits. Again, if you can take a long-term perspective, look at a Merck or when it merges a SmithKline Glaxo. Because, as our viewers sit out there realize, Europe is aging, the U.S. is aging, the Baby Boom is aging. You are younger, the two of you, but we're getting older. We still hopefully can spit it out, but we need some pills in the morning. Think about the great pharmaceutical companies going forward as Japan, Europe and North America age. The profits are there. The profits are there for Intel. Some of these things like Rambus et cetera are almost a sideshow compared to the globalization of information and the fact that Intel is still right at the center of that.</s>HEMMER: Your thoughts now on oil, tapping the Strategic Oil Reserve, as we shift out focus. Economists have come out and said: It's not the best move right now because the supply you would be increasing is minimal related to how much American consumers could really use. Your thoughts on that at all?</s>ROSENSWEIG: Well said. You know, it is a certain supply and that's it. We have an ongoing problem that we're consuming too much every day. I don't want to see families suffer with their home heating oil, we could throw a little bit in the market to help out this winter. But we have a more fundamental situation, which is we are grossly overconsuming. As you know, our trade deficit was announced a few days ago, just another monthly record. Do people realize that is a billion dollars a day, our trade deficit, and oil is a lot of that. You know, when you think about your Ford Excursion versus taking the bus in the future, you know, we do have to go back to what Jimmy Carter tried to get us to think about a while ago, which is we cannot keep consuming what is ultimately a finite resource, and one that pollutes our environment.</s>HEMMER: Well stated. Jeff Rosensweig, from here in Atlanta, thanks. Come on back, all right?</s>ROSENSWEIG: Love to be back.</s>HEMMER: Good deal.