Should Intel Be Inside Your Portfolio? (INTC, NVDA, AMD, ARMH, CEVA)

Intel INTC is set to report earnings next week, and investors will most definitely want to hear what the world's largest chip maker has to say. Intel is expected to report earnings of 53 cents per share on revenues of $11.53 billion. Many are wondering how Intel will move into the tablet space, as it really doesn't have any offerings for tablets, or smart phones at this point. Investors are concerned that PC and laptop sales are nearing a peak, and with that, Intel's bread and butter is at a peak too. Some have expressed concern that Intel will have to buy its growth at this point, given its limited exposure to other sectors of consumer electronics. Some names that have been mentioned about are ARM Holdings (NASDAQ; ARMH), NVIDIA NVDA just to name a few. Nvidia could potentially be a target, but not before the company sees how its new offering, Sandy Bridge plays out. Sandy Bridge is a dual chip on one chip, with a graphics and computing chip on one chip. Additionally, as part of last night's settlement with Nvidia, Intel gets to use NVIDIA graphics technology to develop its integrated graphics chips, and NVIDIA will be able to license some of Intel's technologies, save for the x-86 architecture. ARM Holdings isn't a likely candidate either since Intel licenses from Ceva CEVA in the tablet space. If Intel can't capture the growth it needs from Sandy Bridge, it will have to capture it elsewhere, or risk falling into oblivion, as its Wintel partner Microsoft MSFT has done. If Intel does report a better than expected quarter, names like AMD AMD and the aforementioned plays should see a bit of boost, since Intel is the granddaddy of them all. With a lot of negative vibes out there on the company, and cheap fundamentals, a strong dividend and a ton of cash on the balance sheet, perhaps it does make sense to begin accumulating a position here in the name. 2011 is going to be a very interesting year for Intel, and if it can get its act together, it could be one of the start performers in the Dow. If not, it will continue further into oblivion, as other smaller, faster growing chip companies pass it by, leaving many to wonder why they hold the name. For now, earnings need to be strong, with solid margins and a healthy outlook. Some positive commentary on Sandy Bridge wouldn't hurt either. Disclosure: no position in names mentioned.