by Tom Taulli | January 11, 2012 1:06 pm
Founded over 40 years ago, Intel (NASDAQ:INTC) long had an uncanny ability to catch the big trends. But in the past few years, the company has fumbled — especially with smartphones and tablet PCs. Its offerings have been mostly too expensive and cumbersome. And keep in mind that no smartphones use Intel processors.
Yet Intel still has tremendous research-and-development capabilities as well as an extensive global manufacturing infrastructure. Certainly, the company should be able to get some traction in the mobile industry, right?
Well, it finally looks as if there may be some hope. At the Consumer Electronics Show this week, Intel CEO Paul Otellini gave a presentation about the company’s new Medfield processor. It integrates a CPU, RAM, storage and graphics capabilities on one chip. In all, it can provide five hours of 3G Net access as well as six hours of 1080-pixel video.
Now, while the technology is strong, it’s not a standout. But that may not matter because Intel has a lot of market power to push things forward.
In fact, its first deal is in China: Lenovo will sell Intel-based devices.
Then there’s a deal with Motorola Mobility (NYSE:MMI). The plan is to launch phones and tablets in the second half of 2012. The reach could be significant since Google (NASDAQ:GOOG) is acquiring Motorola.
While these steps are encouraging, they are really just experiments and so will likely have only a minimal impact on Intel’s revenues and profits. It will probably take a few years to move the needle.
The problem is that growth will continue in the mobile space, benefiting players such as ARM (NASDAQ:ARMH) and Qualcomm (NASDAQ:QCOM). No doubt, they will continue to consolidate their market positions, making things even tougher for Intel. Keep in mind that Qualcomm is taking a shot at the Microsoft (NASDAQ:MSFT) Windows mobile market with its Snapdragon S4 processor.
So for investors, it’s hard to see any near-term positive catalysts for Intel. If anything, the core PC business is likely to remain stagnant — which could be a drag on the stock price.
Tom Taulli runs the InvestorPlace blog “IPOPlaybook,” a site dedicated to the hottest news and rumors about initial public offerings. He is also the author of “All About Short Selling” and “All About Commodities.” Follow him on Twitter at @ttaulli. As of this writing, he did not own a position in any of the aforementioned stocks.
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