Despite the Shellacking, I’m Not Selling Intel Corporation (INTC)

Page 1 of 2

Intel (INTC)'s Coming Battle for Mobile Market ShareInvestors of Intel Corporation (NASDAQ:INTC) stock got a rude wake-up call the morning of Friday, Jan. 18, when they saw the company’s shares open down 6% in the wake of its disappointing fourth quarter results.  Before the ink was dry on the earnings report, a cascade of panic rained down from the media.  Calls for Intel’s imminent demise filled the airwaves.  In times like these, it’s worth noting that the stock market can be extremely fickle, and it’s my opinion that the sell-off in Intel shares was overdone.

Indeed, Intel’s fourth-quarter results were poor.  There’s no sugarcoating the fact that earnings for the quarter dropped 27% year over year.  Revenues fell 3% versus the prior year’s fourth quarter, and the company expects another 6% decline in revenues for the current quarter.  For the full-year, revenues and earnings per share dropped 1.2% and 11%, respectively.  To add to investors’ misery, the market got spooked about Intel’s plan to spend $13 billion on capital expenditures next year.  Gross margins are heavily scrutinized for a semiconductor company such as Intel, and the market wasn’t pleased to see margin contraction of almost seven percentage points from last year’s fourth quarter.

The All-But Certain Death of the Personal Computer

The financial media has essentially made up its mind that the PC is officially dead, and that investors would be better served buying stock in QUALCOMM, Inc. (NASDAQ:QCOM) or Broadcom Corporation (NASDAQ:BRCM).  The investing thesis here is that Intel has fallen too far behind the trend away from desktop and laptop computers.  The future is clearly mobile, as the argument goes, and fellow semiconductor companies Qualcomm and Broadcom are poised to be the industry leaders in smart phone chip design.

I’m no technology expert, nor will I ever claim to be one.  I can’t possibly say for certain whether the PC is indeed dead.  My best guess is that it’s not. That being said, I won’t persuade investors to shy away from Qualcomm or Broadcom.  Those companies have a lot going for them financially.  Qualcomm is a $109 billion behemoth that has seen its share price rise more than 17% since the beginning of 2012.  Qualcomm has raised its dividend by more than 12% compounded annually over the last five years.  Furthermore, in its 2012 annual report, the company announced revenues and diluted earnings per share increased by 27% and 39%, respectively.

With respect to Broadcom, net revenues increased by more than 8% for the company in its fiscal quarter ended Sept. 30, 2012, and almost 6.5% during the first nine months of the year.  Diluted net income per share dropped, however, to $0.82 from $1.19 during the previous year’s first three quarters.  Management attributed the drop in profitability to lower gross margins as a result of higher research and development expenses.  The company did raise its dividend more than 11% during 2012, although even with the increase the stock only yields barely more than 1% at current prices.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

The 10 Biggest Outlet Malls in USA

The 5 Most Popular Rap Songs of All Time

The 10 Countries that Eat the Most Meat

The10 Most Expensive Countries to Fly To

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!