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Saturday, October 27, 2012

the INTC hedge

I am not a fan of Intel. The company is about 5years late to mobile, and getting dragged down a sinking PC ship.  But I respects its fierce competitiveness, and its engineering capability.

To date, Intel has been pretty dead within the mobile space. Only recently has it over come battery line issues and App compatibility issues with their Atom base mobile processors, leading up to the 'Razr i'.

The 'RAZR i' allowed for an interesting comparison between ARM based 'RAZR m' that used ARM based processors over a year old. (Comparing a company's latest and greatest vs an older model is really not fair, but so is life.) The comparison was favorable for Intel.  The App compatibility issue was mostly resolved, and real-world power consumption held up very well.

The recent developments showed Intel is on their way to simply enter the mobile market. But, and there is a big BUT, we do not know a lot of things. The most important aspect of thing we do not know is cost. (I am also concerned about how their LTE capability will be.) In fact, the only thing investors know is what Intel 'claims' within their road map. (Their road map is specific to chip size, and nothing more. I am more interested in how the smaller chips will operate with the unit, and if the smaller size really enhances the over all user experience.)

At the moment, the RAZR i looks like a test phone.  If things go well, then Intel will have a basis to tout its experience and performance.  But other chip makers are not standing still. (At the very least, Apple's A series chips are a testament to the innovation push.)

I am a firm believer that QCOM owns the mobile space, and will continue to do so. Hence my recent post, "QCOM - pesky fundamentals", and a position in QCOM.  I do not like investing in "could be" stories, and right now Intel is touting a heavy "could be" story via mobile.  The RAZR i is the only tangible evidence it can enter the space. But a new chip vs an old chip is nothing to really brag about.

On Friday, INTC started to breach its negative trend, via the 14 SMA resistance. Because of the technical set up, I decided to enter the stock.

I view the position as a hedge to QCOM, and the fact Intel is yielding 4% helps.  I will probably hold on to this position until I unload QCOM, or come CES we begin to see just how fruitful Intel's mobile effort really will be. 

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