re MSFT:
I prefer INTC to MSFT.
INTC has a modestly higher dividend.
More importantly, MSFT has legacy products, and has failed to expand into growth software areas. Many people think INTC has the same problem, but I disagree. Intel's core competence is as a manufacturer. Their designs for PC chips aren't really better than what AMD makes, but they consistently execute better. They produce chips better than anyone else, and have for a long time. So, their future is not solely tied to the PC. Intel may transition to being a contract manufacturer, making a wide variety of chips for different applications.
In addition, barriers to entry in chip-making are getting steadily higher. As geometries get smaller, the cost of a chip factory increases, and the difficulty of the process increases. Intel excels at solving these problems. With each industry cycle, there are fewer and fewer companies who can compete in leading-edge production techniques. With software, it's still possible to make a product which competes with the software of leading companies, with modest initial capital. Software has lower barriers to entry. |
