Every great company is built by a great entrepreneur.
Intel (NASDAQ:INTC) had Andy Grove.
Grove, who died this week at the age of 79, put a human face on Intel during its glory years. I can never remember seeing him where he didn't have a smile on his face. He loved his job.
My fondest memory is of the 1997 E3 show in Atlanta. It's the showplace for the gaming industry, and with PCs maturing Intel needed badly to crack the market. So they pulled out all the stops in their keynote, with a Broadway-style production number with their "clean room dancers," then featuring in TV ads. Their outfits were brightly colored - white, blue and gold - but as the number ended the gold dancer removed its "helmet" and was revealed as, of course, Andy Grove.
Despite the exertion, Grove then delivered an impassioned pitch for game machine makers to use Intel as the center of their equipment, which he followed with a long press conference in which he exhausted all questions and never lost his smile, nor his temper. It made all the reporters in the room want to become Andy Grove when we grew up.
Grove defined Intel as the back half of the famous "Wintel" duopoly of the 1990s, with Microsoft Windows as the software and Intel the dominant hardware supplier to a host of Original Equipment Manufacturers, or OEMs. But, as his clean suit performance showed, Grove was never complacent about his company's position in the market. He knew Wintel could fall before anyone else did.
Grove's retirement created the same sort of hangover for Intel that Microsoft suffered after Gates left and that Apple has been suffering since Jobs died. Intel failed in the mobile phone wars and is only now plotting a comeback under Brian Krzanich with its "Internet of Things" approach. The idea is to get Intel's processors and systems into non-electronic products, not only for coordination but for maintenance. It's something I was writing about at the time of Grove's retirement.
Under Krzanich, Intel stock has gone from selling in the low-20s to the low-30s, but the Grove days of super-charged growth and regular stock splits are over. Today, it's an income stock with a current yield of 3%, whose dividend has increased from 10 cents/share 10 years ago to 26 cents today, and which can sustain that yield more than twice over with earnings. The balance sheet is very strong for a chip manufacturer, and that financial strength makes it one of only two companies left that both design and make their own microprocessors (Samsung (OTC:SSNLF) is the other) - everyone else is "fab-less."
If Andy Grove could visit his own funeral, however, he would not be talking about the past at all. He would be talking, earnestly and happily, about "Intel Inside" being an ingredient for every consumer, industrial, and operating product in the world of tomorrow, and in that soft Hungarian accent of his - he emigrated in the wake of the Soviet occupation of the 1950s - he would get you to believe it.
Disclosure: I am/we are long INTC, AAPL, MSFT.
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.