Dueling Fools: Intel Bull

What a difference a year makes. Last year at this time, Intel (Nasdaq: INTC  ) was announcing a 57% drop in net income. Intense competitive pressure from Advanced Micro Devices (NYSE: AMD  ) had forced the company to revamp its upper management team, lay off 10,000 workers, and resort to a fierce price-cutting war in order to stem market share losses.

Well, it has been a long hard slog, but the efforts have paid off; the company has seen its stock increase 44% since last July. More importantly, the percentage of the U.S. retail PC market that it now controls has grown from 45% to nearly 65%.

It would be a mistake, however, to think that this success was driven just by a price reduction. It wasn't. During the past year, Intel also worked hard to re-establish itself as a performance leader among high-end PC users by releasing a number of new products, including the Core Duo and Core 2 Duo.

Some investors might believe that the stock has peaked, but I wouldn't bet on it. Just yesterday, the company introduced its Core 2 Extreme mobile duel-core processor, which offers up to 28% more performance than previous-generation mobile processors. This is the type of incremental progress that can keep the momentum going.

But I'm bullish on Intel for reasons other than its renewed dominance in the higher-end PC market. I also like the fact that its processors can be found in every Microsoft (Nasdaq: MSFT  ) Vista-based PC, and its flash memory components are included in Apple's (Nasdaq: AAPL  ) new iPhone.

Intel's involvement in the WiMAX initiative, along with Sprint (NYSE: S  ) and Motorola (NYSE: MOT  ) , also positions the company well to profit from the boom in the telecommunication market that will unfold as wireless communication becomes nearly ubiquitous and an increasing number of everyday items are tagged with communication chips.

Alas, using your mobile phone to scan an item at the grocery store for the number of calories it contains is just the tip of the iceberg as far as how Intel's chips will provide the foundation for tomorrow's society. I have long been bullish on Intel for its commitment to reinvigorating the health-care market.

To this end, I would encourage investors to closely monitor the activity of Intel's Digital Health Group. As its chips continue to get better, faster, smaller, and cheaper, the opportunity for using these devices to monitor a person's health is very real. And by focusing on preventative health care (i.e., diagnosing a disease or a heart attack before it occurs), Intel has the potential to save consumers, businesses, and even the federal government immense amounts of money.

Put all the components together -- a tightened, restructured organization; growing market share; improved products; and a pipeline of new products to serve the telecommunications and health care markets -- and it is clear Intel's stock still has some room to run.

Wait! You're not done with this Duel. Go back and read the other arguments, then vote for a winner.

Fool contributor Jack Uldrich owns stock in Intel. Intel and Microsoft are Motley Fool Inside Value picks. The Fool has a strict disclosure policy.


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