Intel: trimmed my position

Need to free up cash for other ideas.  I think that other stocks are a much better idea than Intel right now.

Intel may face some headwinds from lower PC sales.  I might be wrong about computing continuing to grow.  Maybe consumers just don’t need to replace their PC as often nowadays.  Or maybe tablets and smartphones really will replace the PC.  (I don’t believe in the latter theory… just Google “replacing PC with tablet”.  It’s not currently viable.)

In the smartphone/tablet space, Intel has been executing poorly.  There aren’t any Intel-based smartphones being sold in the US mainly because Intel’s SoCs don’t support LTE.  Intel won’t release such a SoC until next year. I would like to see Intel focus on its core strength- being the world’s largest CPU manufacturer.  I think that Intel’s strategy of vertical integration between design and manufacturing is an outdated model.  Almost everybody in the business including AMD (and IBM, the former behemoth) has moved away from that model.  Intel should make CPUs and SoCs for other companies and maintain its scale advantage.  Because it has so far insisted on using its own wireless design (instead of licensing one from another company), Intel has virtually no market share in smartphones and tablets.  Nobody making smartphone/tablet SoCs designs all parts of it.  Intel is the only company trying to design as much of it as possible.  It should not be sacrificing its lead in manufacturing to try to support its design businesses.  Intel has gotten away with this practice in the past (the integrated graphics on its CPUs were terrible) but I don’t think that this is Intel’s best strategy.

Looking forward, I don’t know if Intel’s earnings will grow or shrink.  Last quarter earnings shrunk and that is something that goes against my original thesis.  So I think I will migrate to greener pastures elsewhere.  I think Intel will be a good stock to own over the long run but I think that there are better ideas out there.

*Disclosure:  Still long some Intel, I may or may not sell all of it in the future.

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