Another quiet day – of interest was Intel (INTC) reporting Q4 earnings at the end of the day. Earnings obviously did not impress as the stock trades about 5% lower after hours – although not by much – a penny. Not sure why investors got so overly excited. The company still reported revenue of $13.8B (that’s billion and in 3 months!) and maybe it was the guidance of flat revenues for 2014 that led to the drop. Commentary also implied that after hours movement could be as a result of CEO commenting on the stabilization of the PC market and folks taking it as temporary.
I’ve actually been thinking of adding Intel to my portfolio – its a cash machine – despite the “flat” earnings, and pays a nice 3.5% dividend. The company continues to be dominant in the PC & server market. However, the PC market especially has been losing ground to mobile devices, as Lenovo announced in mid-2013 that mobile devices outsold PCs. It’s probably not that hard to imagine – when was the last time you purchased a phone/tablet (1 month for me), vs. a new desktop/laptop (4 years ago)?
While late to the game, Intel has started to offer chip offerings for tablet computers – finding their way into Acer, Asus, Samsung, and Lenovo devices. It would be hard to imagine this chip leader not making more headway in the mobile space and getting more design wins in the future. With investors focused on just the flat PC revenue growth, mobile wins could give the stock price some surprising traction (although revenue from mobile would be a drop in the bucket compared to the PC revenue). Competition is fierce, however, and an investment into mobile chip producers should also include looking at:
- Qualcomm (QCOM) – SnapDragon chipset seems to be the preferred chipset today
- Nvidia (NVDA) – it’s Tegra chip was the mobile champion before QCOM’s SnapDragon came out (with a new version coming out)
- ARM Holdings (ARMH) – it’s processors led at the very beginning; offering high-powered, lower energy consumption chips – of which the Apple iPhone/iPod/iPad chips are derived from
The author use to own each of these companies at one point in his investment journey but unfortunately does not now. A full list of current holdings can be found here.