The world's largest semiconductor firm's stock has become one of high tech's biggest value traps, which isn't a great place to be for stockholders.
But things are changing and tech investors – all investors — should take heed.
First let's look at what it means to be a value trap.
On the value side, Intel Corp. (Nasdaq: INTC) has been and continues to be one of the world's most respected chip firms. And it has the kind of profit margins most hardware companies can only dream about.
Not only that, but last year it invested more than $10 billion in research and development, an amount that was seven times that of second-place spender Qualcomm Inc. (NasdaqGS: QCOM).
Intel's very existence is a testament to high tech's exponential growth. After all, it was an Intel co-founder who came up with Moore's Law, which basically says computing power doubles about every two years.
This is an outfit with a long list of technical firsts that is leading the charge into nanoscale and 3D semiconductors. The transistor gates inside its new Ivy Bridge chips measure a mere 22nm long. At that size you could fit 4,000 of them across the width of a human hair.
Here's the trap…
The big-cap leader's legacy and technical chops haven't translated into stock profits.
Over the past five years, not counting its 3.9% dividend, the stock has returned a scant 9%, almost exactly half that of the S&P 500.
So, you have a great company that's still a solid industry player that can't seem to get out of its own way when trying to unlock that value.
But this sleeping giant is about to awaken — and double the value of its stock.