Intel Corporation (NASDAQ:INTC), the world’s largest semiconductor maker, recently sold $6 billion of bonds in order to fund share buybacks. Although Wall Street doesn’t see great value in Intel’s stock, Intel does.
Some analysts believe the stock has become a value trap. In other words, investors buy the stock because they see they have to pay only ten times earnings and think it’s a great bargain. But over the past five years, the stock has returned investors nothing. What will happen in the next five years, will the stock make a comeback or continue to languish?
I strongly feel Intel will stage a turnaround. While there are concerns over the PC industry growing negatively, a more objective view sees new developments that make the long-term case compelling for Intel.
Intel’s Processors for PCs and Servers Dominating
Intel has reestablished its leadership position in the PC processor space over the past year with rival Advanced Micro Devices, Inc. (NYSE:AMD) losing ground. Intel’s market share in PCs rose from 80.6% in Q3, 2011 to 83.3% in Q3 2012 at the expense of AMD. The lead is expected to widen going forward with new players like ARM Holdings plc (NASDAQ:ARMH) entering the PC market.
The company renamed its core processors; the new name is Haswell, replacing the Ivy Bridge of yesteryear. Haswell is Intel’s first product line designed from the ground up for its Ultrabooks. Haswell-equipped Ultrabooks will have touchscreens.
Intel enjoys leadership position in the traditional workstation, server, and HPC markets with its Xeon product line. Now the company plans to aggressively focus on the HPC accelerator space dominated by NVIDIA Corporation (NASDAQ:NVDA) . This will help Intel dominate the total server space.
Intel’s Processors for Smartphones and Tablets Emerging
Intel released its very first ultra-low power Atom system-on-chip products for smartphones and tablets. A single core Medfield Atom performs about in line with dual core QUALCOMM, Inc. (NASDAQ:QCOM) Snapdragon S4. CloverTrail+, the evolution of Intel’s Medfield processor for high-end Android phones, would feature two cores and support hyperthreading. This will result in a doubling of processor power when it launches later this year. Intel teased the processor, calling it the Z2460.
An entirely new generation of Atom processors, called Lexington, is aimed at emerging markets. Lexington’s reference design adds support for dual-SIM slots and FM radio. Acer, Safaricom and Lava have all signed on to build using the new platform.
Intel recently announced the release of Bay Trail, the next-generation Atom aimed exclusively at tablets. Set to launch during the 2013 holiday season, the 22-nm, quad-core processors are targeting both Windows 8 and Android software platforms. Again, Intel is touting double the processor power while improving power efficiency and reducing prices.