Underpriced Intel Stock Remains Sound Asleep

Nov.22.13 | About: Intel Corporation (INTC)

Intel (NASDAQ:INTC) is a tech company that's always in the news and usually says exciting things for people on the cutting edge of technology, yet Intel stock rarely makes big moves on news, good or bad. One of the company's latest developments, OnCue, is supposed to offer live streaming TV feeds over the internet for subscribers. The release of this new service was originally intended for the end of 2013, but plans may have stalled, just like the stock, which has been locked between $24 and $25 from mid October through late November.

Slow Moving Stock

With a valuation near $120 billion, the stock remains under-priced at 13 times earnings. Since June Intel stock has mostly traded above $22 and under $25 even though the fundamentals suggest that it should at least be a $30 stock. It's a company well aware that PC sales are dying while the popularity of tablets is increasing, in which its chip innovations keep it a significant player. Despite being the leading semiconductor company, Intel simply fails to excite investors, although it seems to be a healthy stock that's not in jeopardy of falling apart. The November 2013 Intel stock price near $24.50 seems to be home for the stock.

Intel Refocuses its Innovation

Intel appears to be abandoning its ambitions to manufacture TV box sets combined with offering media programming to compete with cable entertainment. New CEO Bryan Krzanich has stated that Intel is not a content developer, which is what the project called OnCue needs. Now there's speculation of a spin off of OnCue, possibly to Verizon (NYSE:V). The idea of Intel getting into TV was originally hatched by the previous CEO Paul Otellini before his departure in May. The project was apparently a distraction for the company, as Otellini wants to focus on the mobile revolution, instead of diversifying into an unproven direction.

One of Intel's main competitors in the tablet market is Qualcomm (NASDAQ:QCOM), whose president and COO Steve Mollenkopf seems unconcerned about Intel's development of "Bay Trail" processor for tablets. He disagrees with Intel's statements that tablets will eventually become like PCs, which will give Intel a market advantage. Mollenkopf believes that Qualcomm has created better benchmarks for mobile than Intel. He points out that Qualcomm's Snapdragon 800 processor allows for the new Amazon (NASDAQ:AMZN) Kindle Fire HDX tablet screen to be more readable in direct sunlight, which is not a feature that applies to a PC.

But when it comes to supercomputing, Intel remains the leader, as its parallel architecture remains dominant and untouchable for competitors. No other company has innovated better enterprise processors for large data sets used for prototyping. Intel's development in this space keep the company on the cutting edge of robust cloud technology.

Intel Opens Retail Stores

Intel will be testing its own consumer tech retail stores in November starting in New York City, Chicago and the Los Angeles area. These temporary stores will be open throughout the holiday season and will then shut down in late January. Intel will pattern its retail stores after the models established by Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) to help stimulate sales for notebooks, tablets, 2-in-1s and PCs. The stores will include tech experts to help answer customer questions and to try out products. Customers will also be able to buy products online. What will make these stores unique is they will provide daily coffee and Friday movies for free. The stores will also feature guest speakers and customers will have opportunities to recycle old machines.

Conclusion

Even though it's conceivable that Intel stock could get to $30 sooner or later, almost every press release has minimal effect. Even for the investors who look for financial clues, Intel has not provided much excitement as it turns out no dividend increase is on the way. Investors will just have to be satisfied with the continued .225 quarterly dividend and a stock that's mostly been flat for a decade. Again, it appears to be a safe long term investment, but in the short run it's a sleeper.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.