Intel Corporation (INTC) is the largest chipmaker in the world. Qualcomm Inc. (QCOM) designs, develops, manufactures, and markets digital telecommunications products and services, including developing and licensing wireless technology and manufacturing semiconductors for mobile phones. This article will provide the recent developments for both companies and show why both are winners.
Intel had gone ex-dividend on February 5, 2013 with a cash payment of $0.225 per share, payable on March 1, 2013. INTC closed at $21.18 with 1.16% gain on February 5, 2013. INTC is currently offering 4.25% annual dividend yield.
For the mobile offering, Intel is expected to bring out a new version of Atom (formerly "Lexington"), which uses less power. The new value offering includes the Intel Atom processor Z2420 with Intel Hyper-Threading technology. For smartphones, Intel Atom Z2580 processor platform (formerly "Clover Trial+") will include a dual core Atom processor with Intel Hyper-Threading technology, as well as a dual-core graphics engine. The new platform will deliver up to two times the performance benefits over Intel's current-generation solution (Intel Atom processor Z2460 platform), while also offering competitive power and battery life. For tablets, the next-generation 22nm Atom SoC, "Bay Trail," will be available for the 2013 holiday. The first quad-core Atom SoC will deliver two times the computing performance of Intel's current offering. For Ultrabook, Intel is expected to deliver the 4th generation core processors, the first Intel chips which are built from the ground up with the Ultrabook in mind.
Expansion into Mobile
Intel is attempting to get its processors into mobile phones by joining PC maker Acer Inc. in Bangkok to unveil the Liquid C1 smartphone, running Google Inc. (GOOG)'s Android operating system. This smartphone will be launched in Thailand and rolled out across Southeast Asia, as reported by Reuters. After Paul Otellini's departure, mobile and emerging markets will become major focuses for the new chief executive.
Intel is still facing weak sales of PCs, where the revenue growth from PC had been declining steadily since 2009. This is an on-going concern for Intel investors for a while and Intel's share price should have reflected the declining PC market.
QCOM reported a 36% surge for its Q1 profit due to strong demand from smartphone manufacturers. QCOM beat the estimates and raised its full-year guidance to $4.25-$4.45 on revenue of $23.4B-$24.4B for 2013. QCOM continues to benefit from increasing population of smartphones and the demand for next-generation wireless technology LTE. QCOM also benefited from the trend for larger display for smartphones. Bernstein analyst Stacy Rasgon said the outlook was "massively conservative" compared with his estimate of actual growth prospects. However, given the economic environment, it makes sense to be cautious.
QCOM is delivering new Snapdragon 800 and 600 processors. The new Qualcomm Snapdragon 800 processors will deliver up to 75 percent better performance than the Qualcomm Snapdragon S4 Pro processor with exceptionally low power. The Qualcomm Snapdragon 600 processor is delivering up to 40 percent better performance than the Qualcomm Snapdragon S4 Pro processor at lower power. The Qualcomm Snapdragon 600 processor features a new Krait 300 quad-core CPU with speeds up to 1.9GHz, a new speed enhanced Adreno 320 GPU and support for LPDDR3 memory. The Qualcomm Snapdragon 600 processor is expected to be available in commercial devices by the second quarter 2013.
Competitions are growing while Intel is catching up to the mobile segment and Broadcom (BRCM) is seeking to increase its content on popular devices, as wrote by Mark Sue, an analyst at RBC Capital Markets. QCOM might be also negatively impact as Apple Inc. (AAPL) and Samsung (SSNLF.PK) continue to work on their own app-processor and Huawi and MediaTek also accelerate their internal developments. Nonetheless, analysts expect QCOM to hold its strong position. Citigroup raised its price target for QCOM with a buy rating on January 31, 2013.
Quarterly Revenue Growth (yoy)
Profit Margin, ttm
Return on Equity
Total Debt to Equity, mrq
Source: Yahoo! Finance on February 1, 2013
How to Invest
INTC provides a great value with a very low P/E of 9.3, as compared to the industry average of 21.2. With its strong cash flow and solid dividend, INTC is a good candidate for short covered call option strategy. QCOM provides strong growth with promising outlooks. QCOM is a great long-term holding with buy-and-hold strategy for its stocks. For options investors, a credit put spread can be considered to gain credit premiums while having the potential to acquire the stock at a lower price.
Note: Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.