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INTC: Misvalued again?

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November 30, 2012 – Comments (2) | RELATED TICKERS: INTC

Intel is once again in the bargain bin.  It has bumped along the bottom, hitting 19.50 twice since I first recommended it a year ago.

The company sports a fortress balance sheet, a dominant market position, fab capacity unseen elsewhere in the world, and a best-in-class R+D division that spends more money annually than most countries produce in GDP.  Historically the result has been that they dominate their market.  

Many folks point out that ARM and Samsung currently are scooping INTC in the mobile space, by which they mean tablets and phones.  True - although Ultrabook processors are finding their way into new devices that are replacing tablets in enterprise.  (I know because drug reps haul their hardware through my office regularly.)

But what folks aren't thinking about is the requirements of the *next* gen of mobile processors.  More computing power?  Well, you who've been observing tech for the last 30 years, what do you think?  Longer battery life?  That one's a no brainer.

Who makes higher powered, lower power-using, lower heat chips?  I'll give you a hint: it's the guys who are spending $10B this year to construct 14nm chip fabs for a proprietary design called Haswell.  And who else?

At today's price, you can collect a 4.6% yield while you wait for INTC to absolutely dominate the world's chip markets once again. 

Full disclosure: been long INTC for a year, bought more last week. 

2 Comments – Post Your Own

#1) On November 30, 2012 at 3:13 PM, Schmacko (55.17) wrote:

I've had Intel as a core holding for years.  I think there's more short-medium term downside.  A lots going to depend on who the new CEO is and how well the next gen processors do.  They've lost market share and really need to get involved in mobile.  I'm expecting operating margins to go down the next two to three quarters and then... who knows, but hopefully back up.  Basically I think you need you need a long term investment mindset to get into the stock right now.  

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#2) On November 30, 2012 at 7:16 PM, ikkyu2 (99.24) wrote:

Agreed.  This is a 5 year pitch.  No company has the R+D bang or the R+D bucks to compete with INTC long term.  I am hoping the head of Intel Capital gets the CEO nod, in fact; their return on deployed capital over the years has been world-beating.

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