Intel’s Headed To The Moon

Intel’s laser focus on research and innovation has paid huge dividends. Apple’s move from its long standing reliance on IBM’s chips to Intel’s in 2005, augured its entry into the mainstream PC market. Last year Apple cracked 10% of domestic PC sales; there’s no doubt that the shift to the widely-accepted Intel standard had much to do with its transformation from niche-player to third-largest PC manufacturer. With the breakthrough of mobile devices, Intel is well positioned to dominate a new market once again. After buying the wireless unit of Infineon and ramping up work on its Medfield mobile chipset, Intel reports seeing huge interest from manufacturers of Android-based tablet devices.

The Street and Intel have a rocky relationship, one that revolved around the quarterly numbers game and granular financial results. True, its $7.7B acquisition of McAfee left many analysts scratching their heads, but Intel is making a bet that it can integrate security products as a value-add with its mobile products, a market that is going to be doubling in the next few years. At less than 9x forward earnings, you can get long Intel cheaply and with a yield that bests Treasuries. With a 3.3% yield cushion for investors and its $13B cash cushion, Intel is one of the cheapest, most compelling long-term plays on the huge secular growth store of mobile, and by proxy, Apps.

Source: Market Watch

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