If you are looking for a steady, relatively risk-free investment opportunity, look no further than Intel Corporation (INTC). It is a stable company, and has been doing well in recent news. Intel offers what should be viewed as a safe investment opportunity, with some good room for growth.
One recent announcement makes Intel's financial situation seem very strong at the moment. Intel has declared that it will provide $2.24 million in cash donations to schools and non-profit organizations in Oregon. Companies do not usually make donations of millions of dollars unless they have excess cash reserves and healthy expectations for cash flow in the future. This is also a smart move by Intel management, as helping society in a time of economic struggles will improve the company's relationship with society. Consumers and investors generally want to spend money on those companies that are working to leave a positive impact on society.
More importantly, Intel may have found a few growth prospects for the coming future. The company has announced plans for a set-top television cable box that will supposedly revolutionize television advertising. While Google (GOOG) once transformed online advertising through AdWords and AdSense, Intel intends to push past the tech giant. This set-top box will be a virtual cable service that uses facial-recognition technology to determine the gender of the viewer, as well as if they are a child or adult. This innovation will allow Intel to do well in the advertising market and expand its business.
Intel will be subject to a setback based on the bundling of content though. For Intel to find success with this television box, it must get the owners of cable content to loosen the bundle between the advertisements and the entertainment content. The majority of the television industry is resisting this unbundling as best it can. As Intel's product gains momentum, however, content providers may start to see the benefit of unbundling and partnering with Intel. If the technology actually works, this new advertising scheme will allow for more effective advertisements and an eventual increase in Intel's stock price.
Looking back to its main segment of business, Intel is continuing innovation in the world of personal computers. Intel is pushing for a new, slimmer personal computer called the "Ultrabook." While this prototype may have taken a hint from Apple's (AAPL) MacBook Air, it has not yet met with any substantial success. However, Intel is continuing the research and development necessary to improve the processing chips, materials, and designs of the Ultrabook.
If Intel does follow through with the production of its own laptop, this may even hurt the company in the long run. I see this potential move as an over-expansion. The company is best with producing data-processing chips for personal computers, so this move may be departing too far from what Intel does well. Furthermore, I think the laptop market is saturated with strong competitors, including Apple, Hewlett-Packard (HPQ), and Dell (DELL). While the company is doing well in several ways, I do not think this will be a profitable endeavor for Intel.
I believe that Intel should continue to pursue its attempts to increase its market share in the mobile device industry. ARM Holdings (ARMH) continues to have an upper hand in this market, however, as it uses processors that are more energy efficient, successfully saving battery life in smartphones and tablet devices. There is no doubt the tablet and smartphone markets will continue to grow, and personal computer sales will take a hit in response. This is all the more reason Intel needs to continue work on the efficiency of its processors, especially as ARM continues to move forward.
Intel and Microsoft (MSFT) have recently been in the news because of the possibility that they will form a partnership. Intel has hinted that it may be open to partnering with Microsoft to produce a high-quality smartphone. Intel would provide the physical device-hopefully including a new processing chip that is better suited for smartphones - while Microsoft would provide its mobile operating system, Windows Phone 8.
This potential partnership could be extremely profitable for both companies. Microsoft's Windows Phone currently holds a small market share, yet it has gotten extremely good reviews by consumers. One problem Microsoft does have is that Nokia (NOK) currently provides the devices for Windows Phone. This is a problem mainly because Nokia has been struggling to maintain its cash reserves and profit margins for some time now. Intel would be a vast improvement for Microsoft.
This partnership makes sense for Intel as well. As Intel continues to improve its processing chips, the company needs to find a software producer that will partner with it. The two largest smartphone software owners are Apple and Google, but neither have any reason to partner with Intel in making a smartphone. That leaves Microsoft, which has gotten great software reviews, and only needs to find a way to increase market share.
Having a strong foothold in the technology sector, Intel certainly has room for growth. Its innovations in the advertising industry could be a huge revenue booster for Intel. However, I believe the release of its set-top box may be too far away to have a significant impact on the stock right now. That being said, I do think Intel has a huge opportunity to get into the smartphone and tablet markets. Improving its processing chips to be more energy efficient should allow the company to gain significant market share. A partnership with Microsoft could be in Intel's future as well, and this may help boost profits. I recommend Intel stock, as the company appears to have great potential for growth and success in the future.