Dow Jones 9857.50 -80.82 9:59 am PST, August 12, 2004  NASDAQ 1762.52 -19.90 For info, visit access.smallcapnetwork.com S & P 500 1068.32 -7.47 To be removed, please click here Russell 2000 520.48 -6.15 VOLUME 04: ISSUE 62  Feature: Buying Chips on the Dip? Intel Ripe. Regular readers of SmallCap Digest know that we've not been overly impressed with semiconductor behemoth Intel (NASDAQ: INTC) since August 22nd last year. That could be about to change. Primarily because on July 14th  last, as the shares were banging against a 52-week low of around $22, five major brokerages downgraded the shares from 'buy or overweight', to 'neutral or hold'. What does a neutral rating mean, anyway? And why isn't a market underperformer rating--another beaut--simply a 'sell' or 'avoid'? Why would I want to under-perform the market? I could continue to digress...but you get the point. The consensus analyst view is that Intel is, and has been for the last few months, a buy or strong buy. Even a broken clock is right twice a day. For those who followed that sage advice three months ago when the shares were in the high $20's or better, you're showing a snappy 20 percent-plus loss. Now that the shares have tanked, the analyst backpedaling has, once again, begun. Nothing changes... I would expect this kind of volatility in the SmallCap market, but one would think that the obscenely paid brokerage intelligentsia could be a bit more, oh I don't know, accurate?  Perhaps they went to the same school as the gaggle of economists who consistently miss every economic announcement by a country mile. This august group predicted the job figures last week would be well north of 200,000. The number was just above 32,000 and guess what-- economists  were 'surprised'. That they are still employed or listened to is the only thing that surprises me--Dismal Science indeed. INTC has retraced a little more than 50% of the run it established from the October 2002 low to the January 2004 high. The shares are currently retesting the July low of $22.  We feel Intel looks ripe for a good technical bounce. As well, with this as an entry point, long-term investors could do worse than to buy a little stock at these levels and fill in more on dips or with a dollar cost averaging strategy. Here's the Good Part... Almost a year ago, the consensus projected earnings number for Intel's fiscal 2004 was 85-90 cents a share. Since then that projection has moved to $1.19 for FY 2004 and $1.37 for FY 2005. At $21.75, the shares throw off a projected price earnings ratio of 16 times against FY2005 earnings. A year ago, that projected p/e was nearly 32 times. As the price fell and earnings rose, balance-- and perhaps a decent opportunity--appears to have arisen. I have nothing against Intel as a company--far from it. It's the rah-rah mentality of Wall Street that galls me. Analysts, for the most part, frequently change their ratings with abandon, usually, IMHO, at exactly the wrong time. I know, I've been wrong before. However, I sincerely believe that the risk here at $21.75-ish, is, obviously, way less than it was at $28 and light years better than the year high, so far, of $34.  Time; the great profit machine. For a long-term investor, the timing on Intel feels right. Short-term investors should trade the bounce should it materialize. A run back to $28 is almost a 30 percent return. Oh, and by the way, earnings revisions for Intel have been softening over the last 90 days. Now $1.37 consensus for FY2005 among 30 odd analysts, if it lowered to, say, $1.15, that's still a compelling projected p/e of under 20.  Conversely, those earnings estimates could reverse and rise just as fast. Semi-Tough Semi's For those who wish to play the whole uyfsector, there is also an Exchange Traded Fund (ETF) that tracks all the big semi players, including Intel. Known as the Semiconductor Holdrs Trust (AMEX: SMH), this bad boy virtually mirrors the benchmark Philadelphia Semiconductor Index (XPH: ^SOXX). With an average daily volume north of 20 million shares, this proxy for the semiconductor sector is not for the faint of heart. Opening at $100 in mid 2000, the index has shown vicious volatility and appears to have bottomed at about $18 in late 2002.It regained ground to $45.78 in early 2004 and has since settled just under 30, currently. If you trace from that low of October 2002 to the high of March of 2004, the stock has since retraced more than 50% of its gains. It's oversold for the short term and, we believe, due for a good bounce. For long-term investors, picking away at the ETF's and dollar cost averaging down should pay good returns over the next few years. For those who think the semiconductor sector is the spawn of the devil, SMH shares, which represent depository receipts against a basket of primarily senior semiconductor companies, can be shorted. Given the volatility of these securities, one would want to be extremely vigilant. For those traders who want a down and dirty--and extremely liquid-- way to trade the sector, SMH looks the ticket. As a matter of fact there are scads of ETF's, which can give investors quick trading access to favored countries or sectors. A good place to start is Yahoo's ETF center: http://finance.yahoo.com/etf. Everyone hates semiconductors--and has for quite a while. That's usually a pretty good indicator that at least some accumulation of favored semi-shares is warranted.  "Everyone" is usually wrong.   We Value Your Feedback Got comments, questions or suggestions? Send 'em on over: Editor@smallcapnetwork.com If you wish to send a written request or inquiry, please send it to our physical address: TGR Group, LLC 3525 Del Mar Heights Rd #334 San Diego, CA 92130 Unsubscribe Here D I S C L A I M E R : The SmallCap Digest is an independent electronic publication committed to providing our readers with factual information on selected  publicly traded companies. SmallCap Digest is not a registered investment advisor or broker-dealer. All companies are chosen on the basis of certain financial analysis and other pertinent criteria with a view toward  maximizing the upside potential for investors while minimizing the downside risk, whenever possible.  Moreover, as detailed below, this publication accepts compensation from third party consultants and/or companies which it features for the publication and circulation of the SmallCap Digest or representation on SmallCapNetwork.net.  Likewise, this newsletter is owned by TGR, LLC.  To the degrees enumerated herein,  this newsletter should not be regarded as an independent publication. Click Here to view our compensation on every company we have ever covered, or visit the following web address:  http://access.smallcapnetwork.com/compensation_disclosure.html for our full compensation disclosure and http://access.smallcapnetwork.com/short_term_alerts.html for Trading Alerts compensation and disclosure. TGR Group LLC has not been compensated for this report. All statements and expressions are the sole  opinions of the editors and are subject to change without notice. A profile, description, or other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any securities  mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein. The editor, members of the editor's family, and/or entities with  which the editor is affiliated, are forbidden by company policy to own, buy, sell or otherwise trade stock for their own benefit in the companies who appear in the publication unless specifically disclosed in the newsletter. The profiles, critiques, and other editorial content of the SmallCap Digest and SmallCapNetwork.net may contain forward-looking statements relating to the expected capabilities of the companies mentioned herein. THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY SECURITIES MENTIONED. INVESTING IN  SECURITIES IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. THE INFORMATION FOUND IN THIS PROFILE IS PROTECTED BY THE COPYRIGHT LAWS OF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN ANY WAY WITHOUT THE EXPRESSED, WRITTEN  CONSENT OF THE EDITORS OF SMALLCAPNETWORK.NET. We encourage our readers to invest carefully and read the investor information available at the web sites of  the Securities and Exchange Commission ("SEC") at http://www.sec.gov and/or the National Association of Securities Dealers ("NASD") at http://www.nasd.com. We also strongly recommend that you read the SEC advisory to investors concerning Internet Stock Fraud, which can be found at  http://www.sec.gov/consumer/cyberfr.htm . Readers can review all public filings by companies at the SEC's EDGAR page. The NASD has published information on how to invest carefully at its web site.