Intel: It's About LTE, Dummy

Aug.21.13 | About: Intel Corporation (INTC)

Intel (NASDAQ:INTC) had a 2% up day Monday. The stock was up another 1% Tuesday. This activity was attributed to an upgrade from Piper Jaffray from sell to neutral and an increase in target price from $20 to $22.

Let that soak in for a minute….

An upgrade from sell to neutral from a second-rate sell side analyst and a new target price of $22, a price that was below the price the shares were selling for prior to the "upgrade" caused a 3% increase in the stock price of a $110 billion market cap company?

Have the reporters and commentators sunk so low as to attribute a minor move in a mispriced stock to just any irrelevant noise going on at the moment? Have investors sunk so low as to bite on this reasoning?

The Piper analyst's reasoning was that Windows XP support goes away next year, forcing the business community to upgrade. Oh, and by the way, he thinks Intel might sell some Bay Trail parts next year. Based on that the stock move 3% in two days?

How about this one:

On Monday, Intel hosted a PRESS EVENT at which they demonstrated a multi-mode, multi-band LTE circuit, the XMM 7160, that has been promised to appear by mid-2012, then late 2012, then 1st quarter 2013, and now, finally the part will ship before the end of August.

The analyst upgrade to NEUTRAL has been referenced no less than 19 times on the Yahoo financial website for Intel.

The release to sale of the XMM 7160, a far more important and strategic event, was mentioned exactly zero times by the entire financial reporting network. How do these guys sleep at night?

Even The Motley Fool's Anders Bylund wrote a piece based on the flawed premise that anyone would care what Piper Jaffray thought. If you have to put out articles on a schedule, I guess quality can be spotty.

OK, OK, I guess the free advice from Piper is worth about what they charge for it and TMF has lost their credibility years ago.

This new LTE part from Intel has been promised and is probably a year late, but is so important that I would argue it caused the 3% share price increase even WITH NO PRESS COVERAGE, not Piper's silly upgrade. I would bet the price continues up tomorrow as investors slowly hear about the LTE "happening."

The XMM 7160, while still a step behind Qualcomm's (NASDAQ:QCOM) best LTE offering, at least allows Intel to participate in smartphone designs in the US and many other markets around the world. Paired with the soon-to-be-released Bay Trail application processor SoC, the XMM 7160 should produce some fidgety sleep for the big guys at Qualcomm. I know it shut off pro QCOM, anti-Intel comments on a couple of recent Seeking Alpha articles.

Then, of course, we have the purchase of Fujitsu Semiconductor Wireless Products, Inc. on the quiet. The Fujitsu operation is a highly respected RF and LTE design house that is focused on the LTE Advanced specification. That is like lobbing mortar rounds into the backyard of Qualcomm.

Between the Fujitsu buy and the XMM 7160 release, there should be a substantial increase in heartburn at the Qualcomm corporate headquarters.

That the Fujitsu buy was not announced and the LTE product release is not even on the Intel website signals to me that Intel is tired of being mugged by the financial press and is keeping product-related announcements to themselves. Good for them.

As I have mentioned in a previous piece, the planets are coming into alignment for Intel.

-Haswell is finally moving from desktops to notebooks to Ultrabooks and likely to surprise the "PC is Dead Folks" with a spike in pent-up sales for WinTel PCs.

-Bay Trail will be released, probably at the Intel Developer's Conference the week of September 10. Bay Trail will put a lot of heat on the ARM (NASDAQ:ARMH) based SoCs that have had their way with the tablet market. The discrete XMM 7160 is exactly the part to increase Intel's potential participation to 100% of the tablet market.

-A discrete low power LTE circuit from Intel is certainly a possibility to be adopted by Apple (NASDAQ:AAPL), since Apple uses all discrete LTEs with their home-brewed "A" series application processors.

-Now that there is a companion LTE chip, the dual core Merrifield SoC can come to market later this year with good prospects of design wins in the smartphone segment.

-The McAfee LiveSafe and DeepSafe security products that were designed to work with specific hardware (Haswell) now have their specific hardware, after three years of Intel taking shots from the highly visionary analyst corps. LiveSafe was introduced in May and is now loaded on every Dell (NASDAQ:DELL) computer. I can only assume that the other PC vendors will follow suit. Malware purveyors, beware. This could be 10s of billions of dollars of annually recurring high margin revenue for Intel. What would you pay to give viruses the boot?

-The foundry business has started and will continue to bring value to a select customer group including Altera (NASDAQ:ALTR) and Cisco Systems (NASDAQ:CSCO).

The next several months will be very interesting for Intel.

By the way, Intel has their long scheduled Developer's Conference starting September 10. Apple, who can schedule around anything, has chosen September 10 for the unveiling of some new products just down the road from the Intel meeting. Why?

Disclosure: I am long INTC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.