Intel: Is It Dead Money?

NEW YORK (TheStreet) -- Last month, Richard Saintvilus, contributor to TheStreet, published two excellent articles on Intel (INTC).

While I want to agree with everything Saintvilus said in The Other Intel: Investors Ignore the Good and Intel Is the Stock for the Intelligent Investor, I have to check my instinct.

Over the last two weeks, INTC shares shed roughly 5%. Due to nothing but luck, I got out before the decline at about breakeven. Factor in dividends and covered call income and I actually came out ahead.

After considering bullish arguments, I have to ask, as INTC stagnates and now dips, do we have a buying opportunity or a dead stock?

Intel: Like the City of Buffalo?

Odd comparison, I know. But bear (or bull) with me.

I grew up in Niagara Falls, a stone's throw from Buffalo. Today, Buffalo is not as bad as its critics brand it. But, it's certainly not the thriving metropolis it could be.

Many years ago, politicians made two independent decisions that sealed Buffalo's fate. Rich Stadium, where the Bills play, was located in suburban Orchard Park, not downtown Buffalo. And the University of Buffalo's main campus was situated in another suburb, Amherst, not downtown Buffalo. Instead, downtown got a modest, but serviceable baseball stadium for the city's Triple A club, the Bisons.

Ask anybody. Even people like Buffalo born-and-bred The Goo Goo Dolls and the great Ani DiFranco. They love Buffalo and give back to the community; however, they know that, with some foresight and better planning, the city could be as spectacular as Toronto to the north.

Along similar lines, Intel probably could be known as "The Official Chip Supplier of Apple Products." Or something of the sort.

Hindsight makes us all geniuses; however, it's clear -- while Apple ( AAPL) was innovating, Intel was dropping the ball. Instead of positioning itself as Apple's exclusive partner -- and, thus, a leader in mobile -- Intel hitched to Microsoft's ( MSFT) Windows OS and the litter of spare hardware makers who license it.

If Intel had cemented that relationship with Apple a few years ago, "Intel Inside" might still mean something exciting to the consumer.

Do consumers really get all fired up about buying a Hewlett Packard ( HPQ) or Dell ( DELL) laptop?

Having a chip here or there in an Apple product does nothing for Intel. Owning the PC market does less.

Granted, the PC group saw single-digit revenue increases last quarter. Data center revenue was up 15%. But Intel continues to drop the ball in the mobile space. That raises the question -- would investors rather see Intel protect its cash cow revenue line or take a temporary hit to better position itself for the future?

There's no risk in alienating the HPs and Dells of the world. Microsoft is doing that right now because it sees the writing on the wall. Similarly, Intel should consider acting in its own interest.

Wall Street is a forward-looking animal. For better or worse, it wants to see excitement setting up for tomorrow, not preservation of the status quo.

If Intel was making a smoother mobile transition, I would be less skeptical about its other investments. For a time, funding automotive technology, talk about a cable-style offering and Intel's social publishing endeavor, IQ, excited me.

As I reflect further, though, I wonder if Intel lost its way, at least with respect to mobile. Could it be like Google ( GOOG) with a whole host of non-revenue-generating side projects, but weak, if any, stock price appreciation? Or, worse yet, will it join HP, Dell and Cisco Systems ( CSCO) as blue chips that fell off of the map?

At the time of publication, the author was long MSFT.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Rocco Pendola is a private investor with nearly 20 years experience in various forms of media, ranging from radio to print. His work has appeared in academic journals as well as dozens of online and offline publications. He uses his broad experience to help inform his coverage of the stock market, primarily in the technology, Internet and new media spaces. He has taken a long-term approach to investing, focusing on dividend-paying stocks, since he opened his first account as a teenager. Pendola, 37, is based in Santa Monica, Calif., where he lives with his wife and child.

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