Recommendation: Buy Intel (INTC)

Key Investment Points

• Appears to be undervalued compared to the market

• Strong Research & Development

• High Dividend .90 (3.97%)

• Future Growth Potential

Industry Overview

•Major competitors (AMD, TXN, ARM, Samsung Electronics)

•Worldwide semiconductor sales were 299.5B in 2011

•The Semiconductor market is highly cyclical

•Intel’s market share in the semiconductor industry is 15.9%, Samsung Electronics 9.3%, Texas Instruments 4.5%, Toshiba 4.3%, and Renesas Electronics 3.6%

•Intel enjoys an 80.3% microprocessor unit market share. AMD is the other main competitor.

•ARM Holdings has a 95% market share in the mobile chip industry

Intel (INTC) Company Profile

• 2011 Revenue- 53.99B

• 2011 Net Income- 12.94B

• Full time employees- 100,100

• Intel Corporation designs, manufactures, and sells integrated digital technology platforms primarily in the Asia-Pacific, the Americas, Europe, and Japan.

• Intel offers microprocessors, chipsets, motherboards, flash memory, wired and wireless connectivity products, communications infrastructure components including network processors, and products for networked storage.

Texas Instruments - 480 Million Advanced Micro Devices- 345 MillionARM Holdings- 63.15 Million Intel- 2.51 Billion

Stock has fallen about 20% in the past 6 months

On September 7th, Intel announced that its revenue for the 3Q will be lower than once expected. They lowered expectations to 12.9 to 13.5 B from 13.8 to 14.8 B. Customers are reducing inventories in the

supply chain compared to normal 3Q inventory growth

Softness in the PC market Slowing emerging market demand

Intel purchased 1,700 patents and patent applications from InterDigital (NASDAQ: IDCC) for $375 million in cash in January of 2012. The patents included 3G, LTE, and 802.11 technologies.

The Intel AZ210 was the first mobile device powered by Intel. It is sold in India, UK, and Russia.

Intel entered an agreement with Motorola Mobility, Inc. Motorola recently released the Motorola RAZR I with a 2GHz Intel Chip.

Intel acquired McAfee in 2011 Intel visions adding security features to its chips and hardware

In April 2012, Intel entered into a definitive agreement with Cray Inc. to acquire certain assets related to its high-performance computing (HPC) interconnect program

Recently invested $40 million in 10 different technology companies to “increase utilization of microprocessors between clients and servers”Ultrabook – shipments to increase to 95 million by 2016Windows 8 Haswell – to be released in 2013

“Active-idle” state, where computer thinks it’s awake, but is still mostly asleep. This allows it to have faster wake-up response▪ Maximizes battery life

New Atom chips (“Clover Trail”) Reduced power consumption To be used in tablets along with the Windows 8 platforms

Prev Close: 22.681y Target Est:

26.07

52wk Range:

21.91-29.27

Avg Vol (3m):

40,227,900

Market Cap:

113.47B

P/E (ttm): 9.63EPS (ttm): 2.36Div & Yield: .90 (3.97%)Forward P/E: 10.76Beta 1.01

Investment Information

SWOT Analysis

Strengths

•Strong Operational Capability•Robust Research & Development Capabilities•Brand Equity

Weaknesses

•Dependence on Few Customers

Opportunities•Strategic Acquisitions•Positive Outlook for Semiconductor•Strategic Growth Initiatives

Threats•Competitive Pressure•Rapid Technological Changes

Investment Thesis

• We believe the stock is undervalued compared to the market. The company has a high dividend, a positive future outlook, and potential growth into the mobile chip market.

Sector : Information Technology Current Holdings: EMC, ORCL, AAPL, IXN, IXP Target Sector Allocation: 9.88%, $53,549 Current Sector Allocation: 8.3% , $45,179 Remaining Allocation: 1.58%, 8,563

BUY 350 shares of INTC at a Limit Price of 22.75 (approx. 7,950 , 1.48 % of portfolio)

Holding Period/Exit Strategy: 2-3 years, Consider selling if stock price rises above $35 or below $14 or if fundamentals change dramatically

Portfolio Placement / Recommendation