This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Is Intel This Year's IBM?

As I wrote in January Intel is still seeking its next big thing. As I added more recently, its investment in Cloudera won't solve its growth problem. 

The growth problem has two causes.

The first cause is ARM Holdings (ARMH), which outpaced Intel for years by delivering low-power designs that phone and tablet makers could customize, rather than finished chips.

The second cause is cloud, where companies such as Google (GOOG) and Facebook (FB) have been building their own systems with low-cost commodity chips rather than high-end server chips with high profit margins.

Intel is trying to address both problems, and the Asus deal is positive. But in most growth areas Intel is trying to do things it's not well-known for, such as building finished systems instead of just chips, or creating consumer brands, or pioneering in untried technologies such as the Internet of Things.

Intel's growth strategy is speculative, in other words. Yet it's pushing more than $1 billion a quarter out the door in dividends, and it spent another $2 billion last year buying back its own stock.

Intel is not going broke. It can continue along its current path for some time. But it is rapidly eating its seed corn and needs to show some top-line growth soon if it wants to continue justifying a rising stock price.

At the time of publication the author owned shares of GOOG.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
INTC $30.43 -2.20%
IBM $145.41 -1.10%
AAPL $93.35 -1.60%
FB $116.82 0.08%
GOOG $692.71 0.24%


Chart of I:DJI
DOW 17,750.91 -79.85 -0.45%
S&P 500 2,066.13 -9.68 -0.47%
NASDAQ 4,777.1220 -28.1690 -0.59%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs