Few companies have embodied innovation like Intel (INTC). After doing business for nearly 40 years they’ve become the world's biggest chipmaker and the 31st largest company in the world by market cap. How do you top that?
Intel Chief Executive Paul Otellini joined the panel for this conversation. Following are excerpts from what was said.
What is your window into the health of the economy?
“On the global side, we’re benefiting from a global expansion,” said Otellini. “There are literally billions of people coming into the middle class for the first time in history and all of us who sell products into those markets are going to benefit from that.”
He added, “In the United States, our view is that technology tends to sell through all cycles for the most part. It is the single largest driver of productivity in the US economy.. and it’s also one of the most fun things that people do when they’re not working. It allows them to surf the internet and buy things cheaply through e-commerce and to learn more and to play games.”
How sustainable is the up-tick in PC demand?
The PC this year will hit about 300 million units and I can remember at 50 million… everyone declared the market was saturated and dead,” said Otellini. “The principal reason it keeps growing is emerging markets. There are a lot of people who have computers in the Untied States, Western Europe and Japan, but there are also a lot of people who don’t have computers. So it continues to thrive based upon lower prices and growth of disposable income.”
What’s the rate of growth?
"I don’t think it’s out of the question for computers to take the same kind of ubiquity that you see with phones today. Phones are about 1.2 billion a year world wide, most of them sold incrementally in emerging markets. PC’s won’t hit a billion anytime soon. But I can see them hitting 500 million or even 600 million in the not to distant future," replied Otellini.
Has past weakness in the economy ever worried you?
"In 2000 when the internet bubble burst in this valley it was a great shock. We all said, “on my God no one is every going to buy a server again – the internet boom is over!” said Otellini. “But if you look back and look at trends you can’t see the dip in 2000 from today’s perspective. Traffic has gone up and people are running more networks as well as server data farms to transform information.”
"In general I think computers are going toward the world of the very small or the very large,” Otellini replied. “Think about Google – the data farms they run are larger than anything on earth… they want to have all the information in the world available to their customers - so people will be building up these kinds of data farms.”
He added “On the other end, computers are going to get smaller, and more portable and powerful because you want to have them with you all the time.”
You want to buy SanDisk?
“No comment!” said Otellini.
Dylan Ratigan asked the traders what they think of Intel?
Jeff Macke said he owns it and likes the stock going forward.
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Trader disclosure: On Oct 19, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders;
Macke Owns (ATVI), (EMC), (INTC); Najarian Owns (C), (CY), (GOOG); Finerman Owns (GS)Finerman Owns PHLX Oil Service Sector Index Puts; Finernman's Firm Owns (ASD), (TGT), (MO), (BIIB), (MSFT), (WMT); Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm And Finerman Own (HD)