Does Intel Matter Anymore? (INTC)

Last week Intel INTC reported better than expected earnings and revenues, and actually gave good guidance. Yet the stock sold off on Friday, after having reported Thursday after the bell. Why? Simply put. Intel doesn't matter anymore. It's not a growth company. The PC market is being eaten away by tablets, and there isn't enough revenue being generated in the server market to overtake the PC portion of the revenue. Intel's server chips are growing, at around 15%, but chip sales to computers aren't growing anywhere near as fast. Intel doesn't have a smart phone chip, and it isn't in the tablet game, at least from a traditional perspective. Those wondering why we didn't see a sell off in the broader markets on Friday have their answer. Intel is not relevant right now, and it won't be until it enters these new markets with a chip that people actually care about. Supposedly Intel's new offering, code named "Sandy Bridge," is off to a good start, but we'll see next quarter when sales results start showing up. If Sandy Bridge begins mass adoption, then maybe Intel will start to show a little more relevance again. For now, it's a value trap. The company on a fundamental basis probably should be trading higher than where it is, given the cash on the books, the cheap valuation and the 3% dividend it has. Unfortunately, the market can remain irrational longer than you can remain solvent. If you put money into Intel here, you wouldn't get thrashed, but there's little growth to be had there, at least for now. Other chip companies like Nvidia NVDA, ARM Holdings ARMH have more exciting growth prospects right now and investors are bidding up shares on this basis. That's not to say Intel can't turn the ship around and become relevant again. It's happened before, and it will happen again. Just look at Ford F and Apple AAPL as examples of companies that have made themselves relevant again. It will take everything Paul Otellini and crew have in their firepower to turn around the world's largest chip maker and have investors wanting "Intel inside" their portfolios, and not just in their PCs. Disclosure: no position in names mentioned