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Is Intel This Year's IBM?

NEW YORK (TheStreet) -- IBM (IBM - Get Report) stock was rolling uphill until about a year ago, when it suddenly dawned on the market that much of the company's success was due to financial engineering, and the stock rolled over. Even with recent gains it's one of the dogs of the Dow, down more than 7.0% over the last year.

The same thing may now be about to happen with Intel (INTC - Get Report).

Tech companies are generally valued for growth. Stock prices can be kept high with dividends and stock buybacks, but that's a short-term fix. In the end you need growth.

Intel has increased its dividend over the last five years from 14 cents a share to 23 cents, creating a yield of 3.4% at current prices. But sales peaked in 2011, falling slightly each of the last two fiscal years. Profit margins ticked down slightly in the fourth quarter. Intel plans to report first-quarter results next Tuesday. The stock currently trades at a price-to-earnings ratio of 14.3, while IBM's P/E is 12.9.

Intel shares have been doing well over the last year, gaining about 23%, but the company's position in the "great game" of technology is increasingly precarious.

Intel recently lost out on supplying chips to the Samsung Galaxy Tab 4, to Qualcomm (QCOM). Intel did win a contract to supply phone chips to Asus for the China market. Do the two deals offset one another? If they do, it's barely.

Intel has also announced it's closing its chip testing and assembly operations in Costa Rica, eliminating 1,500 jobs. Intel explains it is moving these to Asia for "geographic closeness between plants and main markets," which sounds like the U.S. market isn't performing.

But the company changed its financial reporting structure so now it's all good? That's what Michael McConnell at Pacific Crest Securities recently decided, causing the stock's price to pop after he gave it an outperform rating.

Is he right?

The financial change will move sales reporting into six piles, with gateways and set-top boxes going into the PC pile. Numbers will also be reported on the Internet of Things, on Data Center products, on mobile and communications, and on software, with an additional catch-all category called "other."

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