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Intel Corporation Message Board

  • lucysuxwang lucysuxwang Sep 28, 2012 12:38 PM Flag

    Not to mention 14nm chips in 2013 to add to all this............

    Intel’s Appeal Continues to Rise

    By Douglas Ehrman - September 28, 2012 | Tickers: AAPL, GOOG, INTC, MSFT | 0 Comments

    Douglas is a member of The Motley Fool Blog Network -- entries represent the personal opinions of our bloggers and are not formally edited.

    While Intel (NASDAQ: INTC) shares dipped nearly 9% since the company reduced guidance earlier this month, this has pushed the dividend yield to 4% and given investors an even more attractive entry point for this solid core holding. Not only does Intel continue to be one of the most skilled companies at managing its public face, its growth prospects are improving heading into the new year. The company is scheduled to release earnings in mid-October, and I believe buying shares ahead of this announcement will prove solid in both the near and longer-terms.

    Public Relations

    For nearly as long as the company has been reporting earnings, Intel has been successfully controlling the flow of information about what its numbers will look like. Time and again, the company will lower guidance a month or so before earnings, only to report an actual number that is superior to the lowered expectation. As familiar as the news cycle has been the trading activity of the stock based on this pattern – the stock is mildly punished on the lower guidance and then more than covers the loss when the earnings “beat” is announced. Despite the regular repeat of these events, the market seems to never learn.

    Along these same lines of press management – in my opinion – is the story that was leaked earlier this week with Intel “bashing” Microsoft (NASDAQ: MSFT). According to the report, Intel’s CEO said that Windows 8 was not really complete and was plagued with bugs, but that releasing the OS on time was the right call. Starting with the statement itself, an ultimate conclusion that Microsoft is making the right call is not really a bash. What it does do effectively is place just enough distance between itself and its long-time partner to allow Intel to avoid any direct criticism if Windows 8 has problems.

    It is not uncommon for software to be released and then rapidly upgraded with easily downloaded patches after the fact. From the PR standpoint, a quick update will be better received than a delivery date miss. All the comment really does is give Intel a little wiggle room when Windows 8 debuts to continue to manage its own press – something it is clearly very talented at doing.

    The Way Forward

    Putting aside the earnings expectation game, Intel has a number of positives that should appeal to investors moving forward. While the company has yet to roll out its own 4G LTE chip, Intel chips are being included in both Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG) devices being sold in Europe. The company is expected to complete development of its offering by the end of the year, giving it the ability to compete more seriously in the U.S. market. As mobile – specifically smartphones and tablets – continue to be the growth focus in computing, a solid entry into this market is vital.

    Of potentially equal importance is the role the company will play in the series of devices that will be introduced in conjunction with the release of Windows 8. Microsoft is set to release its own tablet – named the Surface – that may serve as the first crossover between the PC and the tablet. What is expected to set the Surface apart is its ability to run a near-full version of Microsoft Office. Where Apple’s iPad and Google’s Nexus 7 are primarily used for consumption – reading books, watching video and shopping – the Surface may be the first tablet that consumers can use as a true replacement for their notebooks and desktop PCs.

    Beyond Microsoft, many of the top PC-makers have already announced notebook-tablet hybrid designs. The bulk of these are expected to be powered by Intel chips. If these devices are well accepted as I expect, this could begin another massive shift in the computer market – again with Microsoft and Intel playing staring rolls. The change may be subtle at first, but the real demands of the business community will likely be served by more productive tablets, giving Intel a real opportunity.

    The Trade

    Based on the company’s track record of managing earnings expectations and solid growth potential in multiple areas, the stock is a buy ahead of earnings in mid-October. The shift in the PC world has created real concern for Intel shareholders, but this may be an opportunity for anyone wishing to establish or add to an existing position. With the added kicker of a 4% dividend yield for income generation, the stock should be in your core portfolio.

34.46+0.01(+0.03%)Nov 27 1:00 PMEST