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Tech Is on Sale

I plan on taking advantage of the extreme action in all of my tech holdings.
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Intel (INTC) is down 4% today after several analysts lowered estimates this morning on weak July PC demand. While this isn't a total surprise -- I wrote about demand weakness in the Weekly -- the new incremental data point was that the July notebook build was worse than trend. And now that means August data points will be that much more important. I think back-to-school/holiday trends will lead to stronger August demand, but until there is clarity on the situation, it will likely keep a lid on the stock and the group. That is why I am not buying the stock today -- it already is a big position in the fund -- but plan to should the stock fall to the $18-$19 area. There is a strong valuation case to be made here, especially for the industry leader, with what I believe to be the worst-case-scenario earnings estimate for 2011 of $2 per share (consensus is $2.12 per share), or under 10x earnings, and a 3.1% dividend yield.

Intel has the strongest product cycle in over a decade and continues to take market share both on the consumer and enterprise. Gross margins likely have room to the upside -- it has state-of-the-art manufacturing facilities, a huge cost advantage -- and at the mid 60% level, the stock can continue to be very profitable.

Taking a step back, sentiment in technology is near a trough, with several quality companies literally on sale. I expect the volatility to continue but plan on taking advantage of the extreme action in all of the names that I own: Intel; Cisco (CSCO) , which reports tomorrow after the close; EMC (EMC) ; and Accenture (ACN) .

Regards,

Jim Cramer

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DISCLOSURE: At the time of publication, Cramer was longINTC, CSCO, EMC and ACN.