MediumTex wrote:
I really like this company as a long term holding. It's coming up on a year since I bought my shares and I have been happy with the purchase.
I realize that INTC is a very solid and stable high dividend paying stock now, but have you considered the long-term implications of a shifting market towards mobile devices? Microsoft has already announced that Windows 8 will be released in 2012 and will support ARM processors. Consumers have overwhelmingly began to choose iPad like tablet devices over laptop PCs, and are expecting 8-10 hours of battery life. Low power chips have been a weakness of Intel's x86 architecture for some time now.
Now consider that it is possible that a majority of PCs sold with Windows 8 might be small tablet devices that don't use Intel chips...
On the other hand, IBM has been around for decades and although they don't own the computing world any more, they continue to perform quite well. Intel could be like that.
Last edited by Storm on Wed Jun 29, 2011 9:00 am, edited 1 time in total.
"I came here for financial advice, but I've ended up with a bunch of shave soaps and apparently am about to start eating sardines. Not that I'm complaining, of course." -ZedThou
MediumTex wrote:
I really like this company as a long term holding. It's coming up on a year since I bought my shares and I have been happy with the purchase.
I realize that INTC is a very solid and stable high dividend paying stock now, but have you considered the long-term implications of a shifting market towards mobile devices? Microsoft has already announced that Windows 8 will be released in 2012 and will support ARM processors. Consumers have overwhelmingly began to choose iPad like tablet devices over laptop PCs, and are expecting 8-10 hours of battery life. Low power chips have been a weakness of Intel's x86 architecture for some time now.
Now consider that it is possible that a majority of PCs sold with Windows 8 might be small tablet devices that don't use Intel chips...
On the other hand, IBM has been around for decades and although they don't own the computing world any more, they continue to perform quite well. Intel could be like that.
Well, ARMH is selling at a P/E of 272 with revenue growth of 24% and earnings growth of 10%. It pays a dividend of .5%. It has $462 million of cash and no debt.
INTC is selling at a P/E of 10 with revenue growth of 24% and earnings growth of 29%. It pays a 3.4% dividend. It has $12 billion of cash and $2.3 billion of debt.
In a market where P/E compression is a theme, I think I would rather have the company with a P/E of 10 with double digit revenue and earnings growth than the company with a P/E of 272 with double digit revenue and earnings growth. When the company with the P/E of 10 is growing earnings at 3x the rate of the company with the 272 P/E, I think it makes the choice even easier.
ARMH is obviously a great company, but I don't know if I like it at current prices, while I love INTC at current prices.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
Good point, the P/E of 272 is insane (like dot-bomb year 2000 insane), but I always look at the underlying technological trend as opposed to the current metrics. Perhaps this is not a very good way to invest. FWIW, I only own a small amount of ARMH.
"I came here for financial advice, but I've ended up with a bunch of shave soaps and apparently am about to start eating sardines. Not that I'm complaining, of course." -ZedThou
Storm wrote:
Good point, the P/E of 272 is insane (like dot-bomb year 2000 insane), but I always look at the underlying technological trend as opposed to the current metrics. Perhaps this is not a very good way to invest. FWIW, I only own a small amount of ARMH.
It's not like looking at the technological trend is so bad, but I think it's hard to time, hard to say when people are really going to give up their desktops. I'm excited about tablets, but I'm not cutting the cord anytime soon. And, Intel still has some tricks up its sleeve. I thought I was being clever when I bought some solar energy stocks in '07. Perhaps I'm just (fifty) years ahead of my time.
The barbarians are at the gates of Intel's empire.
Stark Earnings for Intel Reflect Its Changing Market
After decades at the center of Silicon Valley, Intel is now struggling with one of the technology industry’s oldest lessons: beware the cheaper, “good enough”? competitor.
