Willem Schilpzand, a money manager for Alpine Capital Research, said negative sentiment around Intel Corporation’s (INTC) core PC market could present an opportunity for savvy investors.
“Intel has been one of the poster children for the death of the PC negative sentiment and the belief that as the world goes increasingly mobile that Intel’s core PC market would bleed a slow death,” Schilpzand said. “In addition, the belief was, or perhaps still is, that Intel can only make performance heavy chips while mobile products require power efficient chips and that therefore Intel’s mobile ventures would fail.”
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Schilpzand said his firm’s research revealed that Intel had other growth opportunities that weren’t priced into the company’s stock price.
“Currently, only the PC Client and Data Center segments make money and their combined earnings per share is greater than $2,” Schilpzand said. “We see these two segments as Intel’s core businesses.”
At Intel’s current share price, Schilpzand said you can back into a p/e multiple of nine to 10 times by taking out the excess cash on Intel’s balance sheet.
“We believe the core business is worth more than that,” Schilpzand said. “We acknowledge the headwinds to the PC segment, but growing corporate PC profits, innovation in the laptop space and a server business that is growing double digits should lead to longer-term profitable growth in the core business.”
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