The Intel quandary

Is Intel in danger of an Iridium-style plunge out of orbit? Not in the least! Investors who are not picking up Intel shares at under $ 40 a share will forever curse themselves for their shortsightedness.

Sure, Intel is having some difficulty keeping up with Advanced Micro Devices in the highest end of the PC processor field. But only a few buyers require a 1+ GHz computer. The bulk of the market for PC processors is with the big producers like Compaq, Dell, IBM, HP, NEC and scores of others who continue to rely mostly on Intel. 

As the PC market continues to grow, despite any wishful thinking by Net appliance vendors, Intel's sales and profits will continue to grow as well. The company has created itself a license to print money to the tune of 2+ billion dollars every three months and it is investing $ 6 billion this year to maintain its market dominance.

But for a good look at Intel's long-term prospects, other factors weigh heavily. Factors, many IC-focused investors are often not considering when the sell of Intel shares at current prices. For one, Intel is heavily focused on a product diversification strategy.

In other words, ICs are only a part of the future Intel company. For years, Intel has been investing in network technologies and companies. Those investments are starting to pay off handsomely and will accelerate in the years to come.

Perhaps not this year, but at some point in the future, a boom in both ICs and networking will converge and create sales and earnings results that will make the past 10 years of stunning growth look average. Those who bought Intel shares at $ 35-$ 40 will be telling their grand children about their wise decision.

Intel is just too solid a company to ignore when its stock price is down 50 percent. About the closest equivalent of this kind of opportunity was IBM's stock sinking to $ 50 a share in the early 1990s. A buying opportunity like that has not existed for nearly 20 years, unless, of course, you believe the world is about to take a U-turn on the high-tech super highway.

Not likely!

(SVNS)