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Take a pass on Intel, this portfolio manager says

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Paul Harris
Chip-maker Intel (Intel Stock Quote, Chart NASDAQ:INTC) has picked up ground over the first few months of the year but investors looking for growth shouldn’t be swayed by those gains, says portfolio manager Paul Harris, who cautions that the company is still in a transition period.

“Intel is not an expensive stock from a tech perspective — it trades at about 15x earnings — and it pays you a nice dividend,” said Harris, president of Harris Douglas Asset Management, to BNN Bloomberg on Tuesday. “I think that the issue with Intel is this transition from the computer to other aspects of the tech world whether it be cellphones or servers for the cloud business. Intel has not been on the forefront of that over the last several years.”

While AMD and its Ryzen brand of microprocessors are slowly eating away at Intel’s market share, Intel is making moves into other areas such as cloud computing. Intel recently announced a collaboration with Google to accelerate hybrid cloud architectures, a “natural fit” for Intel’s data-centric computing powers, said Intel executive vice president Navin Shenoy.

“We’re delivering an Intel technology foundation for customers to take advantage of their data, and that requires delivery of architectures that can span across various operating environments. This collaboration will give customers a choice of optimized solutions that can be utilized both in the on-prem as well as cloud environments,” Shenoy stated in a press release on Tuesday.

Harris says Intel’s move away from being primarily a semiconductor company and into early-generation products is one that hasn’t caught on in the public mindset just yet.

“The move to smaller devices, they’ve not really captured that market. They’re trying to and they made a bunch of acquisitions. I think the difficult part about it is that they’re still in this transition from people thinking about them as a semiconductor company that has moved into early-generation products,” Harris said.

“I think that it’s a great company and it’s well-run and all of that but if you want faster growth, you have to go to other places,” he said.

Intel’s last quarterly earnings report came on January 24, where the company posted revenue of $18.66 billion, a nine-per-cent year-over-year increase but lower than the $19.01 billion consensus expectation, and EPS of $1.28 per share, which was better than the expected $1.22 per share. (All figures in US dollars.) As of Tuesday’s close, INTC was up 18.6 per cent year-to-date.

About The Author /

Jayson MacLean
Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.
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