Intel and Dell value traps

I notice Intel (Nasdaq: INTC) did a proactive release indicating that their third-quarter expectation is below their public target:

The company now expects third-quarter revenue to be $13.2 billion, plus or minus $300 million, compared to the previous expectation of $13.8 billion to $14.8 billion.

Intel is trading around a P/Es of 10, but it is a classical value trap. The company is a victim of a slower sales cycle – people no longer need to replace their PCs and notebooks every two years like they did a decade ago. Likewise, Intel is facing the declining technology refreshment cycle in addition to having traditional PCs/Laptops marginalized by tablet computers. Intel should be able to diversify enough that it can escape out of its trap over time, but I am not so sure about Dell – they are further entrenched in the traditional PC/Laptop market than Intel is. Dell has simply turned into another retailer, competing in a commoditized retail market. This is a recipe for margin shrinkage.

The market is also signalling this by virtue of Dell having a forward P/E of 6 based off of consensus analyst estimates. Anybody want to make a bet that those EPS estimates are going to go down next year? Right now they are saying $1.80/share.

I don’t have interest in either companies other than just following them for curiousity’s sake.