I expect to take quite a bit of heat by writing this article, so let me set a few things straight right off the bat.
- I have owned Intel (INTC) on and off for decades.
- I have made money trading the stock.
- I own the stock right now.
- My public portfolio, Team Alpha Retirement Portfolio, owns shares.
- The company has been a truly fabulous company for as long as PCs have been around.
- The stock has been, and still is, a lousy investment.
I hardly ever write anything about technology simply because others are so well versed in the "techno-geek babble" and "chipite-infrastructure" than me, that I have just let all of those feel good mumbo jumbo articles have their say. Why? Because all of them are absolutely correct.
Intel is producing the products of the future for whatever it is they are trying to get involved in. Forget about being late to the mobile/tablet market. Forget about the rapidly declining PC market which just happens to be where INTC has reaped its profits from. Just close your eyes and forget all that "common-man" "uneducated" stuff, and focus on the future of Intel.
Guess what folks, investors have been focusing on the future of Intel story more than a decade, and the future just never seems to come.
This Is The Only Chart An Investor Needs To See
Look, Seeking Alpha is an investment website. Investors come to this site to make money, period. If investors wanted to learn the intimate knowledge of the guts of a chip, there are sites that are focused on that.
This site is all about making money in the stock market. With Intel being a large holding of many investors portfolios since 2000, money has been lost, big time, and this chart tells it all:
I personally know people who still own shares at $40, $50, and $60, and while they have successfully traded around the edges, wrote calls against their positions, and hedged their way out of very steep losses, the stock has been a complete and utter flop.
Keep in mind that INTC has been paying dividends regularly since 1992. That is wonderful for us dividend folks, but it is not a dividend champion as yet, since it only has a record of increasing dividends for 9 consecutive years, and in 2009 it was raised only by one penny!
That being said, if you had purchased INTC back in 2000 at a price of let's say $60.00/share, you would have received a grand total of $5.65/share in dividends, bringing your cost all the way down to $54.35/share.
Figuring in the dividends over that period means you would only be down about 65% as of today, in total value, and your yield on cost, even at today's dividend would only be roughly 1.5%.
Of course the "Technophiles" will argue that I have no idea what I am talking about, and toss up graphics about the FUTURE of INTC.
Such as this one:
The chart is lovely, as is the promise of this article:
The Intel X99 Chipset which has not been confirmed would be the successor to X79 chipset. The motherboards would be based around the LGA 2011 socket allowing compatibility with Sandy Bridge-E CPUs. However there's something else TweakTown reports that Intel may most probably ditch their Ivy Bridge-E processors and instead launch their Haswell-E processors this year. We can't say how much truth does this hold since an Intel roadmap showcased not only over two months ago revealed Ivy Bridge-E's launch during Q3 2013 so whether or not Tweak Town's statement hold any truth only time would tell.
Pretty cool stuff, right?
How about this one:
Bay Trail has been fed to us for how long now? Check out this press release:
Intel Corporation executives held a press conference today to outline a plan to accelerate new mobile device experiences across the company's growing portfolio of smartphone, tablet and Ultrabook offerings.
The announcements included a new smartphone platform for emerging markets, details on a forthcoming 22 nm quad-core SoC for tablets, and more personal and intuitive Ultrabook devices in innovative convertible designs were outlined by Mike Bell, vice president and general manager of the Mobile and Communications Group, and Kirk Skaugen, vice president and general manager of the PC Client Group at Intel.
"The best of Intel is coming to a mobile device near you," said Skaugen. "We are set to deliver the biggest increase in battery efficiency in Intel's history with 4th generation Intel Core processors, while adding broad new human interfaces to computing devices through touch, voice, facial recognition, and gesture-based interactions. We're also significantly extending the performance and power savings in Atom processors as we accelerate our mobile offerings in an unprecedented fashion in 2013."
This was 8 months ago folks. So far, we have not seen anything that has driven the stock, or our investment, higher. Investors can continue keeping our collective heads in the sand, or take a look at some realities.
The Realities That Investors Face With Intel
The truth of the matter, when it comes to INTC as an investment, is easily seen in the following graphics:
Year over year quarterly income has tanked.
Year over year quarterly sales growth has been a disaster.
Profit margins have dropped by 20%.
As an investor, not as a technophile, I would have to say that the future looks much better than the past and the present. That being said, the future has not arrived for more than a decade.
For now, I am holding shares of Intel for the dividend, and the promise of some capital appreciation and steady dividend growth.
The company has plenty of money and is a huge mega cap blue chip. If the dividends are not raised meaningfully, or the future of all of the great technology fails to produce shareholder value, I am dumping and running.
Oh, and yes I know Intel is up $0.70/share as I write this. I hope it keeps it going.
Disclaimer: The opinions of this author is not a recommendation to either buy or sell any security. Please do your own research prior to making any investment decisions.