Intel Scorned by Investors, Loved by Funds

BOSTON ( TheStreet) -- Intel ( INTC), the chipmaker that's reporting quarterly earnings after the stock market closes today, is among the most scorned tech stocks by investors. Still, some fund managers including Carl Goldsmith judge the company differently.

Goldsmith, manager of the Marshall Large Cap Focus Fund ( MLIFX), notes that Intel is "no home run in terms of growth rates," but he still expects earnings to grow at a double-digit rate over the next five years, making the stock an attractive bet based on its risk-reward profile. The fund manager projects that Intel's shares will outperform the broader market this year.

That view may be tough to swallow. While the tech-heavy Nasdaq has risen 18% over the past 12 months, Intel is little changed, eking out a 1.4% gain. The Marshall Large-Cap Focus Fund had about a third of its assets in technology stocks as of Nov. 30, and Apple ( AAPL), Google ( GOOG), Microsoft ( MSFT) and IBM ( IBM) are among the fund's top holdings.

Still, Intel has beaten earnings-per-share targets over the past five quarters, and the world's largest chipmaker is expected by analysts to post record revenue in the fourth quarter. But investors are concerned most with the fact that Intel's chips are absent in smartphones or tablets, which have ridden to success as the next technological wave, thanks to Apple's iPhone and iPad.

Goldsmith, though, doesn't think that Intel is going to be left behind.

"The overall number of devices that will be out there is going to continue to grow at a reasonably rapid rate," Goldsmith says. "I'm talking globally. The global markets are very large. Intel is extremely well-positioned as a global player. It has a terrific reputation globally. There's no better manufacturer in the world."

Goldsmith says his best guess is that Intel will be able to incorporate silicon into all of these kinds of devices. While there's no way of knowing for sure, Goldsmith says he's less concerned about smartphones because it's not clear any company can make a lot of money in that market.

"People are making a mistake in underestimating Intel's ability to adapt to the environment that is likely to exist in the next three to five years," he says. "While they don't have an Intel processor in anybody's table device today, I'd be extremely surprised if, 18 months from now, they weren't incorporating a decent amount of silicon out there. That will lay to rest these fears that Intel has died."

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