JayGatsby Posted January 25, 2019 Share Posted January 25, 2019 Solid quarter. Not sure why they don't get more love in the value circle. Their "cumulative shares repurchased" line is always fun to watch. Their guidance equates to a PE of 10. Link to comment Share on other sites More sharing options...
Liberty Posted January 25, 2019 Share Posted January 25, 2019 Solid quarter. Not sure why they don't get more love in the value circle. Probably because "Buffett doesn't like tech" is so ingrained. Link to comment Share on other sites More sharing options...
HJ Posted January 25, 2019 Share Posted January 25, 2019 There is a perception that they are falling behind TSMC and Samsung in the next node, and may start to lose market share in data centers, where they are currently almost a monopoly. Link to comment Share on other sites More sharing options...
Spekulatius Posted January 25, 2019 Share Posted January 25, 2019 Solid quarter. Not sure why they don't get more love in the value circle. Probably because "Buffett doesn't like tech" is so ingrained. I agree it looks interesting and cheap. It’s sort of a company BRK should hold a stake in. I put it on my watch list again for the next market correction. Link to comment Share on other sites More sharing options...
Jurgis Posted January 25, 2019 Share Posted January 25, 2019 I don't think INTC being cheap is just because of "Buffett doesn't like tech". The bear narrative is: - PCs are flat to down - INTC lost mobile - Fabs possibly falling behind TSMC and Samsung - Most growth is in GPUs, not CPUs - Most of their growth/diversification initiatives were bungled - They may lose data centers (I think this the weakest claim compared to ones above.) What is the bull narrative? OK, INTC might be a valuation-based buy - I won't argue with that. But assuming a long term hold: where do bulls see INTC in 5-10 years? What will be different from the last 10+ years? INTC sales growth has been 6% annual starting from 2008, and pretty zeroish starting from 2012... Similar with OCF (I eyeballed that one though). Link to comment Share on other sites More sharing options...
Liberty Posted January 25, 2019 Share Posted January 25, 2019 I don't think INTC being cheap is just because of "Buffett doesn't like tech". The bear narrative is: - PCs are flat to down - INTC lost mobile - Fabs possibly falling behind TSMC and Samsung - Most growth is in GPUs, not CPUs - Most of their growth/diversification initiatives were bungled - They may lose data centers (I think this the weakest claim compared to ones above.) What is the bull narrative? OK, INTC might be a valuation-based buy - I won't argue with that. But assuming a long term hold: where do bulls see INTC in 5-10 years? What will be different from the last 10+ years? INTC sales growth has been 6% annual starting from 2008, and pretty zeroish starting from 2012... Similar with OCF (I eyeballed that one though). Not what I meant. I meant that value investors don't seem to look much at the stock, possibly because it's tech, and value investors have a cultural baggage that makes them less interested in tech (that's been changing a bit in recent years). Link to comment Share on other sites More sharing options...
Liberty Posted January 25, 2019 Share Posted January 25, 2019 There is a perception that they are falling behind TSMC and Samsung in the next node, and may start to lose market share in data centers, where they are currently almost a monopoly. Yeah, Intel has been a SNAFU after the other lately... Missed all their roadmaps, lots of process trouble. Most of Apple's Mac troubles in recent years have been because of Intel, pushing Apple faster torward making its own ARM desktop and laptop chips, which won't be good for Intel.. Link to comment Share on other sites More sharing options...
HJ Posted January 25, 2019 Share Posted January 25, 2019 The bull narrative would be they bought Altera, they are in networking now, they ventured into DRAM memories, and are in a good position to re-architect chips for the future where deep knowledge across the functionality is likely necessary, and not simply compete on the basis of going to the next node. If they can get the Apple guy over to be their CEO, they might yet get back into the mobile game, where they are already manufacturing modems for iphone. But the bull thesis seems to be much less tangible and measurable than the bear case that can be made. If the interim CEO doesn't really want to be the permanent CEO with no obvious reason, there might be deeper problems that is not revealed from financial statements. I don't think it's that hard to imagine AMD taking 10%-15% share in data centers on the basis of Intel's problematic migration to 10nm node. Last time AMD is perceived to have gained a step with Athlon in 2006, their market share in servers went into 20+%. Link to comment Share on other sites More sharing options...
JayGatsby Posted January 25, 2019 Share Posted January 25, 2019 Bull narrative is they have a monopoly in their core markets, which 1) have a fairly rapid replacement cycle, and 2) are mostly long term grown industries (I'm pretty certain in 20 years the world will be consuming more data than today, and more of that data will be in the cloud). I think sometimes people get so focused on finding the "bull thesis" and having a story, that these sorts of things just get neglected. People want quick money and a story for why they'll double their money tomorrow. Here you have a monopoly business, that's also a cannibal and a pretty solid track record of capital allocation / value creation. There isn't really a story... thesis is that next year will be basically the same as this one. It's the same reaction as when I talk to value investors about Kinder Morgan. Next year will be basically the same as this year. They'll either keep generating a 12% FCF yield or the price will go up. It doesn't matter which one. It's almost the anti thesis. Maybe AMD gains 20% despite a massively smaller R&D budget. You'd still have a pretty reasonable valuation. Link to comment Share on other sites More sharing options...
Liberty Posted January 25, 2019 Share Posted January 25, 2019 Bull narrative is they have a monopoly in their core markets, which 1) have a fairly rapid replacement cycle, and 2) are mostly long term grown industries (I'm pretty certain in 20 years the world will be consuming more data than today, and more of that data will be in the cloud). I think sometimes people get so focused on finding the "bull thesis" and having a story, that these sorts of things just get neglected. People want quick money and a story for why they'll double their money tomorrow. Here you have a monopoly business, that's also a cannibal and a pretty solid track record of capital allocation / value creation. There isn't really a story... thesis is that next year will be basically the same as this one. It's the same reaction as when I talk to value investors about Kinder Morgan. Next year will be basically the same as this year. They'll either keep generating a 12% FCF yield or the price will go up. It doesn't matter which one. It's almost the anti thesis. Maybe AMD gains 20% despite a massively smaller R&D budget. You'd still have a pretty reasonable valuation. Do they have a monopoly, though? Other fabs seem to have passed them in process. Other architectures are getting close in their main market (and are better for certain application -- ie. ARM already better for mobile, and getting better on performance/watt for PC/datacenter, Google's TPU already better for machine learning), and the hyperscale cloud players have the resources to design their own CPUs and outsource fabbing and keep the margin that Intel would make for themselves. They certainly have a monopoly-like market share, but that's backwards-looking. Looking forward, it seems to me like there are cracks in their moat. Maybe they can fix them, but maybe not and over time their operating leverage starts biting the wrong way. I don't know, it's not a situation I follow too closely, but that would be my quick hypothesis to attack if I want starting work on it. Link to comment Share on other sites More sharing options...
JayGatsby Posted January 25, 2019 Share Posted January 25, 2019 You could be right. I don't know a lot about the tech side. I am talking entirely backward looking. Seems like it's been the same story with Intel for 20 years though. It feels like one of those Howard Marks "this time is different" kinda things, but maybe this time truly is different if Intel trips and others pass them. 2014: https://www.fool.com/investing/general/2014/10/08/why-ibm-is-the-real-threat-to-intels-server-domina.aspx 2006:https://money.cnn.com/magazines/fortune/fortune_archive/2006/08/21/8383598/index.htm I always think it's interesting that the only sticker on my computer other than Lenovo is "Intel". Edit: I also think Peter Thiel's observation that monopolies downplay the fact that they have a monopoly is interesting here. From a regulatory perspective the constant perceived competition is ideal. It could be genuine competition this time though. I'm sure China would like a piece of that market share. Link to comment Share on other sites More sharing options...
Liberty Posted January 25, 2019 Share Posted January 25, 2019 You could be right. I don't know a lot about the tech side. I am talking entirely backward looking. Seems like it's been the same story with Intel for 20 years though. It feels like one of those Howard Marks "this time is different" kinda things, but maybe this time truly is different if Intel trips and others pass them. 2014: https://www.fool.com/investing/general/2014/10/08/why-ibm-is-the-real-threat-to-intels-server-domina.aspx 2006:https://money.cnn.com/magazines/fortune/fortune_archive/2006/08/21/8383598/index.htm I always think it's interesting that the only sticker on my computer other than Lenovo is "Intel". The Wintel duopoly was very strong, one of the best money-making enterprise ever, but Windows isn't exactly what it was either, right? Things stay the same until they aren't. That's why this job is hard, you have to made judgement calls about uncertain things. But a lot should go into the too-hard pile... If you look at it one way, you could say that Intel lost a ton of market share in the past decade. Smartphones and tablets are computers, regardless of what we call them. Basically none of them run on intel CPUs... Link to comment Share on other sites More sharing options...
gfp Posted February 7, 2019 Share Posted February 7, 2019 Thought this was interesting if unsurprising - First Srouji was rumored to be headed to Intel as the next CEO, then no- he stayed on at Apple. Intel has been rumored to be really struggling with their 5G modems and Qualcomm-competitor products. This article claims Apple has moved modem / radio development in-house. Presumably bad for Intel. Not sure how Apple pulls it off without QCOM licenses but I suppose that IP will be available at a more 'reasonable' price after these court cases wind up. https://www.macrumors.com/2019/02/07/apple-in-house-modems-johny-srouji/ Link to comment Share on other sites More sharing options...
Castanza Posted May 9, 2019 Share Posted May 9, 2019 Between poor management, a stretch of poor manufacturing, AMD eating their lunch in the cloud/data center space, Qualcomm besting them in mobile chips........When does this become attractive to you? I've been wanting to take a position in this for awhile, but they have too many issues right now. 10nm would be big if they could roll it out (been delayed since late 15). But even that won't "fix" any of these issues. Link to comment Share on other sites More sharing options...
walkie518 Posted May 14, 2019 Share Posted May 14, 2019 Between poor management, a stretch of poor manufacturing, AMD eating their lunch in the cloud/data center space, Qualcomm besting them in mobile chips........When does this become attractive to you? I've been wanting to take a position in this for awhile, but they have too many issues right now. 10nm would be big if they could roll it out (been delayed since late 15). But even that won't "fix" any of these issues. it's highly likely that over a longer stretch of time, Intel will weather the storm though today's price is likely a fair one to pay for a good business in a slightly less favorable landscape than say 5 years ago the trend will be on the side of those with scale... then again the competition is growing from a couple to a handful of players, some of which might keep foundry in-house like Samsung or whatever the Chinese might develop, but the company with the largest Si wafer will win on cost! wonder how much of a moat one might be able to build w/the instruction sets? guess would be somewhat marginal? Link to comment Share on other sites More sharing options...
compoundvalue Posted July 20, 2020 Share Posted July 20, 2020 Bumping this up. I wonder at what point it becomes attractive. I mean even if the Client Computing Group is a melting ice cube, the remainder is a fast growing data driven $35-40bn business. If you look at peer group valuations, there seems to be a disconnect Link to comment Share on other sites More sharing options...
Spekulatius Posted July 20, 2020 Share Posted July 20, 2020 Bumping this up. I wonder at what point it becomes attractive. I mean even if the Client Computing Group is a melting ice cube, the remainder is a fast growing data driven $35-40bn business. If you look at peer group valuations, there seems to be a disconnect I looked at INTC and I think their moat is rapidly dwindling. The moat consistent of three parts (design prowess, 8086 architecture, and manufacturing tech). In manufacturing tech, they were leading with TSMC and Samsung and now they have fallen behind significantly. Design was always intertwined with their 8086 architecture and it seems now that many companies have access to the better TSMC manufacturing tech and can design better chips - look at what AMD has done and what Apple is doing. Another thing - INTC often has tried throwing large amounts on money in new promising sectors but had never succeeded. one example was optical networking 15 years ago. It was a total failure. Now they are trying the driverless car tech. It may lead to the same result. INTC is at a cross way - they either need to double up and catch up on manufacturing tech or call it a day and go fabless. https://forums.anandtech.com/threads/speculation-intel-will-become-fabless.2549870/ Link to comment Share on other sites More sharing options...
rb Posted July 20, 2020 Share Posted July 20, 2020 Yea, but it's also trading at like 12 P/E not 25 or 30. Link to comment Share on other sites More sharing options...
Jurgis Posted July 20, 2020 Share Posted July 20, 2020 INTC is still dominant in servers/cloud. I've seen pretty zero AMD on Azure. And for CPU (non-GPU) AI/ML/NN workloads people optimize for Intel chips/instruction sets. Of course, the risk is that this could shift to AMD too if price/performance becomes significantly better. Disclosure: no position. Link to comment Share on other sites More sharing options...
Spekulatius Posted July 23, 2020 Share Posted July 23, 2020 The tone from today’s earnings release sounded pretty bad, but at least now it’s priced it. Bought some shares today AH at $54 and change. Link to comment Share on other sites More sharing options...
Liberty Posted July 24, 2020 Share Posted July 24, 2020 The problem with falling further behind a fast-moving target (TSMC) when you're already behind is that it increases the odds that you'll *never* catch up. Or that by the time you do, the world has changed (more ARM, ASICs, GPUs, and AMD in datacenters). https://www.tomshardware.com/news/intel-announces-delay-to-7nm-processors-now-one-year-behind-expectations Link to comment Share on other sites More sharing options...
nspo Posted July 24, 2020 Share Posted July 24, 2020 The contrarian in me tells me to buy but my better judgement is telling me this issue is in the "too hard" pile. Like Liberty said, it may prove extremely difficult to shoot at a moving target. Industry momentum in it's current state will prove tricky for INTC to catch up to. Link to comment Share on other sites More sharing options...
Liberty Posted July 24, 2020 Share Posted July 24, 2020 It's certainly not a good sign that Jim Keller left Intel after only a short time at the company... https://www.theverge.com/2020/6/12/21288938/jim-keller-leaves-intel-chip-designer-executive-silicon-amd-tesla-apple Link to comment Share on other sites More sharing options...
mwtorock Posted July 24, 2020 Share Posted July 24, 2020 I think the reputation is severely damaged. One of the ways intel protected its moat was to catch up quickly in a quarter or two so OEMs did not want to switch gears to work with AMD or others and always waited for intel for various reasons mentioned by folks here. Now that people see intel falls behind for so long, they will have no choice but to switch. Once the majority adopts AMD chips for example, intel will have to fight pretty hard to get back shares. Not that they can never catch up, but the odds are not good. It is IBM vs. MSFT (or AWS). Link to comment Share on other sites More sharing options...
scorpioncapital Posted July 25, 2020 Share Posted July 25, 2020 Very few companies keep their moat for extended periods of time - that's a myth. Sure you can buy a moaty company as it has a decade or two of protection ahead of it. But success really sows the seeds of competition and eventual decline. But if its cheap enough , and the advantages are half decent why not? I mean a moat should be measure on a scale from 0 to 10. A moat that's a 6 or 7 is not the end of the world at the right price. INTC seems super cheap pumping out 17.5 billion of free cash flow or 12x FCF. AMD has the same market cap and makes a tiny fraction of this, heck I don't think they make much money at all. Is growth really so much more valuable than cash? Let's see what happens in a normal investment environment where returns, cash mean something and growth is far more skeptically assessed. Link to comment Share on other sites More sharing options...
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