Many investors are currently kicking themselves for missing out on their first opportunity to capitalize on Intel's (INTC) rapid growth when its share prices reached a 52 week low of $19 in September of 2011. However, despite the recent failure of many to make significant profits off of the leading producer of microchip processors, the most recent news being released for Intel indicates that further growth is on the horizon and that it will result in substantial dividend payouts in the months to come.
With a solid basis for continued growth based on Intel's impressive annual reports, it is easy to presume that Intel has the momentum traveling forward to make further gains.
In 2011 Intel reported that it had closed the year out with approximately $13 billion in net income, a nearly $2 billion increase from 2010 and an astonishing $9 billion increase from 2009.
What is even more compelling then the numbers themselves is that during the last three years, Intel was still in its infancy stages of its $1.4 billion acquisition of Infineon's (OTC:IFNNF) Wireless sector, which Intel purchased the beginning of 2011.
This move, which commenced Intel's presence in the smart phone market, has allowed Intel to make significant gains in providing microprocessors to cell phone companies such as India-based Lava and Motorola (MMI).
However, what has become infinitely more important for Intel in its desire to further its presence in the booming smart phone market is the introduction of Intel's newly designed Medfield microprocessor.
These processors offer state-of-the-art technology that will be utilized by smart phones and, with Intel's anticipated release of the Clover Trial microprocessor by the end of 2012 that will be used for Window's 8 tablets, has furthered its appeal to technology companies.
Dominating Apple is the Primary Objective
With Intel's established relationship with Apple (AAPL), which has resulted in Intel providing microprocessors for all of Apple's personal computers since 2005, it is perplexing to understand why Apple has yet to change over to Intel microprocessors for its smart phones and tablets. Apple continues to fuel these devices with ARM (ARMH) microchips.
It is no secret that consumers have been shifting their interest from personal computers to tablets and smart phones in the last year. It was reported that in 2011 the sale of smart phones exceeded that of personal computers for the first time in history.
Further, tablet sales, which are formulated in the PC sales figures, recorded 186.2% growth in 2011, the highest of any personal device.
In the forefront of all of these numbers is the iPhone, which sold a reported 37 million units in the fourth quarter of 2011 alone.
What all of this data indicates is that moving forward, iPhone serves as the ultimate gold mine for microprocessor companies such as Intel and, despite its current inability to secure this lucrative partnership, it has continued to improve its position in becoming more appealing to Apple in the future. If a future deal is struck it is easy to assume that Intel's share price would rise to a level it has never seen before.
A Profitable Deal With Dell
Server and personal computer giant Dell (DELL) has recently released its intention to utilize Intel's Ivy Bridge microprocessor to run its micro server, a device that is meant to conserve space and energy in contrast to the more cumbersome standard servers. With the introduction of the Ivy Bridge chip to these processors, the downside of micro servers due to their limited performance capabilities should be diminished, opening the market even further to cost conscious companies who wish to utilize these servers as an alternative to the expensive full sized servers.
Intel's Success Outside the Microprocessor Realm
Beyond the hope of future dealings with Apple, what makes Intel a strong buy for investors currently is that, beyond its command on the microprocessor market, Intel has made gains in other sectors that will be profitable in the coming months.
One such sector is the semiconductor market, which was reported to reach a 10-year high in demand in 2011.
Although Intel holds less of a market share in the semiconductor market than in the microprocessor market, it still leads its competition with a market share of 15.6%.
However, despite its lead, the biggest competition may arise in the coming years from Qualcomm (QCOM), a company that reported a record growth of 41.6% in 2011, which pushed it up to sixth place in the semiconductor market with a 3.3% market share.
Regardless of which way investors look, the news for Intel is positive. With the continued growth in demand for mobile consumer products, Intel's improved position in other markets and, with its accelerated presence in the smart phone industry, the prospect of landing even further contracts with cell phone companies such as Apple, it is my opinion that Intel will remain a strong buy for investors for the remainder of 2012.