patrick.net

I have been in and out of INTC over the past few years, and I still keep my eye on it. I agree it is starting to look tasty again, but that's just based on the stock price trajectory and not any fundamental analysis of the business. I have shifted (somewhat) of thinking of Intel as a reliable long term company (a place to park your money and collect dividends) and more of a speculative play with a solid dividend to sweeten the deal / hedge a bit. I say this not because I think Intel is going to implode in the short term, but that I think they could see a long slow demise unless they figure shit out. I also think they could get back on track and continue to be a solid company, in which case they might be a good buy now or soon.

I don't really follow them very closely, but my perception is that they missed the boat on a few things, and have had to use their might to power through it. They haven't participated in the mobile revolution like they should have. Their foray into high performance graphics was a bust (last I checked).

I may be a buyer again, but I don't find them very exciting. (I don't know jack shit about investing, BTW)

I am also thinking about Intel, but I am concerned about the growth aspects of desktop CPU's (since that part of their product mix supposedly isn't doing to well). I guess I can take another look at it to see if the SSD side can make up for it. Their lack of market leadership position in the mobile market bothers me.

More interesting is to see how low AMD is.

Probably an OK short term play.

Intel is hurting if they can't make major inroads into the mobile device market. You have a relatively stable workstation market for business, but laptops and desktop markets are eroding. Supposedly they have some new high core count mobile chip in the works, but it will only sell if batter life is there too, and that's an area where Intel has struggled..

Where do you come up with your $18.50 figure?

zzyzzx says

I am concerned about the growth aspects of desktop CPU's (since that part of their product mix supposedly isn't doing to well).

That bit concerns me too, I don't think desktops and laptops are going away though. I do think people will refresh their home computers less frequently which will definitely be an impact. I think a big growth segment is CPUs for cloud infrastructure computers wether they be stand alone or part of a VM environment.

E-man says

I'll definitely be a buyer at $18.50.

I am a maybe below 20. Definitely will pick some up below 19. I base those numbers partly on the P/E, but partly I just find a price I am comfortable with and set a target a point or 2 below that. It's not very scientific, but has worked well in the pas with large cap stocks for me.

fil says

I do think people will refresh their home computers less frequently which will definitely be an impact

That is also a big concern of mine, unless AMD goes under and has a liquidating bankruptcy.

Sold AAPL short at 611, rode it down to 534, then rode it back up to 705, then finally bought to cover at 540 this week.

I probably covered it too early.

Thinking about AMD...

justme says

Sold AAPL short at 611, rode it down to 534, then rode it back up to 705, then finally bought to cover at 540 this week.

I probably covered it too early.

Thinking about AMD...

You have a strong stomach. What were your stops?

Any chance of a nice head and shoulders pattern for AAPL?

Still waiting to put on an epic short.

Those who believe stock prices are driven by fundamentals will be unpleasantly surprised.

Asset prices and fundamentals are reflexive. This is Soros 101.

E-man says

Possibly. If I have to guess, this is it for AAPL's run. I would take some chips off the table on the rebound.

It is too scary to put on a short now without waiting for a meaningful retracement to the upside.

I'm long INTC. AMD is dead (or dead man walking). I picked up more around $21, and may buy more. Cloud/server/datacenter market for CPUs is all sewn up. PC sales will never go away, but I do worry about the slow slide. I'm hoping that the growth markets in Asia will help, as well as an end to the current hold of PC purchases till Win8 gets released.... The bad news is yes, they are so freakin' slow to the mobile party. The good news is that they are now addressing the problem, and will take time. And when you get INTC's attention (ala AMD in the early 2000s), watch out....At this point, it's all about margins and foundries. INTC is the biggest, spending a shitload on R&D, and make a product even the Chinese can't copy. I like that moat.

Peter P says

Those who believe stock prices are driven by fundamentals will be unpleasantly surprised.
Asset prices and fundamentals are reflexive. This is Soros 101.

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Peter, I'll admit I'm very new to the self-investing scene. You have a point on the short and even medium term. But I disagree on the long-term, and that's what I'm all about. I'm assuming you are talking to your day-trading brethren, and not the long-term DGI investor?

AverageBear says

AMD is dead (or dead man walking).

AMD of all the tech companies in SV... one expected AMD to have died long long long ago.. back in 1990, 95, and then again in 2005 and 2010...

But they out lived National Semi, Sun Micro, and a number of others. who knew !

Like its founder Jerry Sanders.. its an stubborn old fart... just doesnt go away!

thomaswong.1986 says

But they out lived National Semi, Sun Micro, and a number of others. who knew !
Like its founder Jerry Sanders.. its an stubborn old fart... just doesnt go away!

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You can say the same about herpes too :) Just kidding, but as far as AMD goes, I can't think of giving them my money, when INTC is the one w/ the moat. It spends more in R&D than AMD's profits.

AMD now below $2/share!

I'm averaging down again on AMD. That will be my last. It's a small investment. I'll sell next time it hits 8.

Intel on sale right now!!! Down to 19.68 (on HP woes, I think).

Down some more to 19.29

intel probably is a -not- good long term hold (5+years) - its price is negatively biased over the last 15 years, so over the long term, decent price appreciation is very questionable unless intel can find a new billion dollar market (no person can predict this accurately). also, over the last 15 years, you would've made money holding intc about 57% of the time given a one year holding period, which is not great; you'd be better off trying to trade the sp500 index.

there are two pluses, it's got a nice 4.56% dividend yield, and it's selling far below its 200 moving average so you can play a technical bounce - but this would be a short/mid term trade and you need to know what you're doing. you also run the risk of prices dropping further instead of bouncing. buyer beware.

i can't speak to fundamentals since i'm not watching this stock.

just based on technicals i wouldn't buy because there are better stocks out there. also i hate companies like intel, it's not very predictable because its share price is heavily correlated with new technology breakthroughs which come sporadically.

Hysteresis says

intel probably is a -not- good long term hold (5+years) - its price is negatively biased over the last 15 years, so over the long term, decent price appreciation is very questionable unless intel can find a new billion dollar market (no person can predict this accurately). also, over the last 15 years, you would've made money holding intc about 57% of the time given a one year holding period, which is not great; you'd be better off trying to trade the sp500 index.

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Hysteresis, yes, the price of INTC has been stable, but the growth of the divvy can't be ignored. If you dripped during the last 10 years, your yield on cost would be quite impressive. The to make good money w/ INTC, you'd have to hold 100 percent of the time....I know nothing on technicals and trading on technicals. I do think many believe INTC is too late to the mobile party. I think we are in the 2nd to 3rd inning of this game....

AverageBear says

I do think many believe INTC is too late to the mobile party. I think we are in the 2nd to 3rd inning of this game....

You mean now that INTC is trying to get into the mobile market, the growth rate for mobile stuff is flat or flattening in a hurry, right?

zzyzzx says

You mean now that INTC is trying to get into the mobile market, the growth rate for mobile stuff is flat or flattening in a hurry, right?

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Depends on the country you are talking about. Are you talking about the US, or globally? India, China, Brazil, etc are just starting to ramp up. Texas Instruments? Knocked out. AMD, not looking so good. The following link is obviously biased, but is worth reading....

http://seekingalpha.com/article/1057801-intel-otellini-thinks-they-have-already-won

..........."Q: Paul, I've got another one that I'd like to ask. We've seen and talked a little today about the challenges of maintaining Moore's Law. Challenges increasing across the industry - we've seen rising CapEx - not just for you but for many players - difficulty managing product and process roadmaps, capacity constraints, yield problems. I wonder if you could talk about how you see some of the further challenges of Moore's Law impacting you over the next years, but more importantly how you think they will be impacting some of the other major players in [inaudible] the Samsungs of the world and, I guess, as a corollary, or as an add on to that, do you think Samsung's IDM model will give them an inherent advantage over the kind of pure foundry players in the Moore's Law march.

PO: well, I do think there are a number of transitions coming up in this decade. You've got the transition to 450 at some point, you've got the transition to EUV at some point. Both of those transitions are expensive and are going to require scale. In general, every time there has been a wafer size change, in our industry, there has been half as many players on the other side of those transitions, half as many people manufacturing, half as many people designing. Because the scale drives this stuff. So, I think you will likely see the structure of the industry evolve pretty dramatically over the next 4-5 years. It's clear to me that Intel will be viable on the other side of that chasm, it's clear to me that Samsung is very likely to be viable, certainly as a memory supplier, on the other side of that chasm, although they will have to deal with EUV a generation before we do because of the memory cell. Um, how far the foundries go d across that chasm is really a function of how good they are in term of technology development. And that gets back to my view of the increasing lead we have on the industry. You talked about strained silicon before, yeah, we did that, what six years ago? Now it is pretty much common place. We did High K four years ago at 45(nm), ah.. people are barely figuring that out today. Trigate? We are on our second generation no one has figured that out, they aren't going to figure that out. Part of the thing is that…the industry..if you wind the clock way back, it was all Integrated Device Manufacturers, and it was because there was no common recipe for semiconductor process technology. Everybody kind of invented their own, therefore you would have to design your own product for your own silicon technology and, to some extent, your technology represented the product you were building. And then by the time you got to the 80-90s the recipes were pretty common, we all bought the same equipment, Intel might have been early on the transition, but it was pretty much the same. And reverse engineering through destructive analysis was very much possible, You could sort of figure it out. You get to the dimensions that we are at today, and reverse engineering destroys the part in a way that you can't analyze it. So, you know there's Hafnium in there, but you have no idea how we use it, what the proportions are. So, it's becoming more difficult for everybody to, sort of, ride the coattails, either as equipment manufacturers or as device manufacturers. So, I think that, therefore, you're likely to see much more churn in the classic fabless world than we've seen in, certainly, the last couple of decades. And that churn is manifesting itself with increased costs, you've seen a lot of the noise around that, and in poor yields, and in pricing models that are changing, where people have to pay for wafers as opposed to good die. So now the fabless guy eats the yield loss vs. the foundry eating the yield loss. All that is changing, and it's happened already, that's new. Fast forward another 2-3 years, and I think it becomes more difficult. So, our position looks very good in that model, because we will be able to bring to our shareholders the profit margins of running a foundry for our own products and the architectural margins we get already. So, we get paid twice for our chips is the way I would describe that vs. Qualcomm that gets paid once for the chips, maybe once for the IP, but they certainly have to pay someone else the foundry margins.

As this stuff gets harder, and as the benefits of the technology becomes more manifest in particular, mobile devices where form factor and power are critical, I think our lead extends there.

I think Samsung will be across the chasm as a survivor, certainly in memory, maybe in logic. The rest of it is subject to these transitions of EUV and wafer scale. When fabs cost $10 billion, which they will, it takes $20 billion to fill them at 50% margin, who's got that kind of revenue?..........."

SFace says

Without getting too technical about Intel, but here is my train of logic.
*Intel makes glob of money from the PC processor
*PC processor for desktops and laptops
*desktops and laptops are replaced by tablets
*Tablets does not have Intel inside, and even if it does, it's probably not profitable.
* Average selling price for PC's and laptops will come way down, bringing average selling price of Intel prodcessor down. This trend will not reverse itself.
* Gross margin trend is everything to Intel, it will come down.
* Look at the gross margins trend. It eats itself slowly and eventually disaster. Kind of like HPQ. Little signs here and there, and boom, crisis.
* The golden business is being threatened.
* From that perspective, it is not a buy, too little upside. You buy Intel because of the PC and windows but this is a world trending toward mobile phone/tablet in Apple/Android.

--------------------------------------------
SFace,

I see why you and many investors are a little worried about Intel, for many good reasons. However, Intel has had more serious threats (ie, caught napping in early 2000's when AMD 'stole their lunch' for a few years. What happened? They 'poked the bear' so to speak, and AMD is on the ropes. Not really tech-speak, i know. Here are my reasons why I think INTC will do well in the long-term.

- PCs will not go away. Sales may slow, but not by a substantial amount. PCs and especially servers, will be needed for business in China, and other high-growth nations.
- INTC makes gobs of money on server chips. They own this market, and not scared about ARM entering this market.
- Tablets will compliment, but not replace PCs in the workforce.
- Those tablets that do replace PCs, will be in the form of a hybrid tablet/workbook, similar to MS's Surface Pro; which by the way, has INTC in it.
- INTC bought ZiiLabs, and mobile graphics chip company, bringing this inhouse. To me, this doesn't look like a company giving up on mobile.
- INTC is one of the 3 major chip foundries (TSCM and Samsung), and is WAAY ahead in the shrinking die game. 45nm > 22nm, etc.
- It took time for INTC to dominate the PC chip industry, but it did.
- it took time for INTC to dominate the Server chip industry, but it.
- It will take time for INTC to dominate the mobile chip market, and I'm betting it will.
- I think (but have no proof) that Apple will look to INTC for iPad chips in the future(moving business from rival Samsung).
- I do not buy INTC for the PC/Windows business (though it's still bringing in good money. I'm buying INTC because they have the best run foundries, are way ahead in the shrink-die game. More consolidation within the industrry will continue to happen, and INTC will still be there. INTC is (finally) moving to get in on the mobile market. It's happening already. It will start muscling in on ARM's low-power market, offering the same low-power #'s w/ better computing power.
- As a dividend growth investor, I will continue to buy small chunks of stock, while DRIPPING the growing dividends into more shares. I'm hoping for a yield on cost above 6% before I retire. That's my game plan w/ INTC, among the other dozen or so dividend paying stocks.

I keep reading about tablets replacing PCs, but I don't see it that way. Tablets can replace some functions of the PC, but certainly not all. I think the biggest problem for PCs is that they have become so powerful that you don't need to replace them very often. This means less PC sales for sure. I don't see any of these so called market experts ever mention anything about servers though. A world of tablets and phones requires a lot of cloud connectivity and that means servers. Intel makes a a lot of motherboards and chips for servers so that market should be growing. I don't see Intel has a huge growth stock, more of a value stock. Sometimes it becomes undervalued and that offers a chance to make some gains. The dividend should see growth overtime as well.

fil says

I think the biggest problem for PCs is that they have become so powerful that you don't need to replace them very often.

I am posting this message using an AMD Socket A MB with an Athlon 2400 processor and I only have 1GB memory and it works just fine. I built this PC in 2004, and it was low end when I built it.

zzyzzx says

fil says

I think the biggest problem for PCs is that they have become so powerful that you don't need to replace them very often.

I am posting this message using an AMD Socket A MB with an Athlon 2400 processor and I only have 1GB memory and it works just fine. I built this PC in 2004, and it was low end when I built it.

At work we replace our laptops every 3 years, but my home PC is probably 5 years old. When I bought a PC in 1998 it was outdated in 2 years.

SFace says

it is not a buy, too little upside. You buy Intel because of the PC and windows but this is a world trending toward mobile phone/tablet in Apple/Android.

AverageBear says

- INTC is one of the 3 major chip foundries (TSCM and Samsung), and is WAAY ahead in the shrinking die game. 45nm > 22nm, etc.

AverageBear says

I'm buying INTC because they have the best run foundries, are way ahead in the shrink-die game. More consolidation within the industrry will continue to happen, and INTC will still be there.

The difference between a quant and a technologist.

Look where the quants got us in 2007-2009.

I will go with the technologist.

I will go with the technologist.
While I liked some of AB's analysis, I thought he was off on a couple of points:
AB said: - INTC makes gobs of money on server chips. They own this market, and not scared about ARM entering this market.
Data centers are about watts per square foot these days. The more power efficient ARM represents a way to lower operating costs.
- I think (but have no proof) that Apple will look to INTC for iPad chips in the future(moving business from rival Samsung).
Apple designs their own chips for iPads and iPhones. They appear to be just getting starting with the talent acquired from PA Semi and Intrinsity. In fact, some are speculating they will be putting their own chips in their notebook line. I think I misread your point, which is not that Apple will go with x86 based chips in iPads, but that Apple may use Intel as a foundry to manufacture their Ax chips. Will be interesting to see if this happens. Margins seem to be a big concern, though...

EB Guy,

Jerry Sanders was a little bit before his time in an earlier decade when he said something like Real Men Have Fabs.

Remember, Moore's Law has always been what it always was, about Cost Reduction and Nothing Else. You don't think so? Find his paper that's archived in the press section of the Intel website, and read it for yourself. (Cost Reduction has not been just about Technology Innovation. It's also been about Financial Innovation like foisting off some of your capital costs {"CapEx" for Cool Hipsters like our AMEX black friend} onto taxpayers in municipalities like Hsinchu or Rio Rancho or the State of New York).

Another word for Moore's Law is a "race", - a race to the bottom. Kinda hard for all those fabless outfits to thrive and also share their margins with a foundry in a Moore's Law Cost Reduction Race to the Bottom. All those Cool and Hip (and FabLess) Outfits you're talking about will have to share their margins with their foundries. Intel and Samsung won't have to.

B.A.C.A.H. says

Another word for Moore's Law is a race to the bottom. Kinda hard for all those fabless outfits to thrive and also share their margins with a foundry in a Moore's Law Cost Reduction Race to the Bottom. All those Cool and Hip (and FabLess) Outfits you're talking about will have to share their margins with their foundries. Intel and Samsung won't have to.

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Exactly.....

BACAH, I did like the pithy Jerry Sanders quote. Is it also fair to summarize this way: Until we diverge from silicon based computing solutions, Intel IS THE MAN?

Very interesting Seeking Alpha article on Intel: BUY BACKS DONE RIGHT...

http://seekingalpha.com/article/1068981-intel-s-big-buyback-will-roast-the-bears

....."Of course, with the PC "dying," and with Intel having "missed the boat" on mobile (which seems silly since the "boat" is always coming back every year or two depending on your contract with your carrier), shares of the chip giant are at a mind-boggling bargain. Intel bears will point to the share price's stagnation over the last 10 years while conveniently ignoring the fact that Intel's EPS has been very rapidly growing due to substantial increases in net income as well as a dramatic reduction of share count....."

......"Much of the time, stock buybacks by companies (especially tech companies) are not done particularly opportunistically. In fact, the majority of the time, investors are left scratching their heads wondering why the firm decided to spend their cash buying back stock at obscenely high levels.

Intel is slightly different. The firm is very opportunistic about its purchases and is shameless about letting Wall Street know when it believes that shares are substantially undervalued by borrowing money to buy back shares. The firm first did this in September of last year, issuing $5B worth of non-convertible bonds for use in buybacks. This strategy made perfect sense: the share price was at ridiculously low levels, borrowing costs at even more mindblowingly low levels, so it was a no brainer for a successful company that is confident about its own future.

1. intel has a 4.38% dividend yield today.

2. their dividend is growing quite nicely; growing 10% to 20+% per year every year since 2007. even during the recession intel increased their dividend which is impressive.

if you are a patient investor, and can wait, you should receive an increasing dividend just to hold onto intel shares (at roughly 4% yield/year).
if you can squeeze out a 2%-4% capital gain/year over the next few years i'd consider intel a fairly decent investment (6%-8% total return). you also have more upside over this amount if you believe this latest pullback is oversold which i think it may be.

the price is fairly range bound since 2004 - between $12/share to $28/share with the price at $20/share today; right in the middle.

$12/share was at the recession low, that's probably a hard floor and won't go below it unless something catastrophic happens.

$28/share was this march and it pulled back nicely to $20/share today; about a 29% drop in 9 months. this large, fast drop doesn't happen very often and typically price will bounce (for a quality company) which means it may be a buy opportunity.
in these cases, you hold it for less than a year or two.

you still need to check fundamentals; especially earnings and cash since you want to have a good amount of confidence the dividend will continue to be paid out.

long term, i still hate the way the price moves.

Hysteresis says

you still need to check fundamentals;

Here are some fundamentals:B.A.C.A.H. says

Moore's Law has always been what it always was, about Cost Reduction and Nothing Else

(Cost Reduction has not been just about Technology Innovation. It's also been about Financial Innovation like foisting off some of your capital costs {"CapEx" for Cool Hipsters like our AMEX black friend} onto taxpayers in municipalities like Hsinchu or Rio Rancho or the State of New York).

Another word for Moore's Law is a "race", - a race to the bottom. Kinda hard for all those fabless outfits to thrive and also share their margins with a foundry in a Moore's Law Cost Reduction Race to the Bottom.

Kevin, any comments on this thread?

Bump. Kevin, any comments?

Still waiting for the post kicking the can down the road 2 months deal bump to dissipate.

I found this article fascinating...and the comments just as important... I love Seeking Alpha. Check it out...

http://seekingalpha.com/article/1100401-intel-the-chess-game-in-mobile-semiconductors