Alex Filonov's  Instablog

I reopened position in Intel (INTC) on Thursday, May 10. I actually had Intel position through 2011, trading around. In January, I closed position, because it was at the top of the trading range. What I didn't see at the moment, was the huge bull market which just started.

Of course, I'd prefer to reenter position at lower price than I closed it. But we play cards served, not those we wish we had.

Intel is a great company. It produces unique product, has unique technology. In words of Warren Buffet, Intel has a moat. Company increases earnings at decent rate and pays big (more than 3%) dividend, which was increased three times in the last 18 months.

I waited for an entry point. And waited. On Thursday, I pulled the trigger. Tech was being killed by Cisco (CSCO) warning. As usual, it was killed just in case, without discrimination. And it was wrong. Cisco problems: reduced government spending in the world. In other words, it looks like dictators of the world already bought enough Cisco equipment for internet censorship. At the same time, Cisco is having great sales related to the cloud. And Intel doesn't produce equipment for internet censorship and produces the heart of the cloud: almost all servers in the world have Intel CPUs.

Intel has only one weakness: mobile platforms. Smart phones, pads, other mobile devices usually use ARM (ARMH) CPUs. There is a good reason for it: Intel CPUs are way too complex, it's impossible to make them energy efficient enough. Even though Intel technology is better, their CPUs have many more transistors than ARM-based competition. I don't think Intel can win here. There isn't much money to be made, and expense might be significant. I actually will be worried if Intel spends a lot of money on mobile. There is a lot of money to be made on servers and PCs.

I don't know if Intel hit the bottom. If it's going lower, I'm going to add to position.

Disclosure: I am long INTC, ARMH.

Additional disclosure: I have no positions in CSCO. Positions can change any time.