Intel Corporation (INTC) designs, manufactures, and sells computer components and related products. The Company's major products include microprocessors, chipsets, embedded processors and microcontrollers, flash memory products, graphics products, network and communications products, systems management software, conferencing products, and digital imaging products.
The company had Q2 2012 revenues of $13.5B. This missed the $13.6B consensus estimate of the 42 analysts following the company. This was 4.6% above the prior year's Q2 results. Intel reported 2nd quarter 2012 earnings of $0.57 per share. The company's annual 2011 EPS was of $2.53. Consensus analyst estimate of Intel's annual EPS is $2.48 for 2012 and $2.64 for 2013. (For more info click here)
A short term uptrend started in Intel's share price since July. We expect the stock to retest its 52 week high in this uptrend. It's also possible that the short term trend could eventually transform into a medium to long term trend from here.
Intel Invested Billions of Dollars in Manufacturing to Support Future Technology Advancements
The new investments reinforce Intel's leadership in the most advanced semiconductor manufacturing in the world. Intel's brand-new development fab in Oregon - to be called "D1X" - is scheduled for R&D startup in 2013. Upgrades are also planned for a total of four existing factories in Arizona (known as Fab 12 and Fab 32) and Oregon (known as D1C and D1D).
"Intel makes approximately 10 billion transistors per second. Our factories produce the most advanced computer technology in the world and these investments will create capacity for innovation we haven't yet imagined," said Brian Krzanich, senior vice president and general manager of Intel's Manufacturing and Supply Chain. "Intel and the world of technology lie at the heart of this future. Contrary to conventional wisdom, we can retain a vibrant manufacturing economy here in the United States by focusing on the industries of the future."
Intel's first 22nm microprocessors, codenamed "Ivy Bridge," will be in production in late 2011 and will boost further levels of performance and power efficiency. By continuing to advance manufacturing process technology, additional features and functions can be integrated and enable devices with sleeker designs, higher performance and longer battery life at lower costs for users.
The Ivy Bridge line of processors is the first to include features at 22 nanometers. Other chips offer feature as small as 32 nanometers, and Intel's new processors allow transistors on the chips to be more densely arranged. The new chips, while smaller, provide greater speed and efficiency than previous chips, marking a new advance in the technology.
The company is exploring manufacture of another version of the three-dimensional transistor using features of only 14 nanometers. The new technology is expected to go to production in 2014. (Read more)
Intel's Business Growing Moderately
In Intel's second quarter earnings conference call, the management announced some forward-looking statements based on the current macro environment. The following points are noteworthy in assessing the future growth of the company.
- The 22-nanometer process health is ahead of where 32-nanometers were at the same point in its ramp, and ahead of the management's own plans. That enabled the management to ramp Ivy Bridge to nearly a quarter of the company's PC volume, their fastest ramp ever.
- Ultrabooks continued to build momentum, and achieved the volume goals for the first half. The company is now tracking over 140 Ivy Bridge base designed in the pipeline. Of those, more than 40 will be touch enabled and a dozen will be convertibles.
- In the data center business, volume growth combined with a rich mix drove record server revenues. DCG grew 15% over the second quarter last year with cloud volume growing at more than twice the rate of the rest of the server market segment.
- In the smartphone space, the company saw the launch of Medfield-based phones from Lenovo, Lava and Orange to great reviews. These launches further established Intel in the market building on the wide presence the company has in baseband.
Analyzing the available data and the company's financial performance we can conclude that the company's core business of enterprise data centers remains strong, despite macro weakness. In addition, Intel's new Ivy Bridge processor and Ultrabook laptops are expected to boost its margins considerably in the coming quarters.
Intel Stock: Short Term Outlook
The stock registered a 52 week low of $19.16 and a 52 week high of $29.27. We expect the stock to retest the 52 week high shortly. The RSI and MACD indicators are signaling a bullish move ahead. The pattern of the 20-Day, 50-Day and 200-Day SMAs also indicates a short term bullish outlook for the stock.
Short term investors are advised to enter the counter in any dip towards $25.50 for a significant gain over 10% in a very short span of time. A strict stop loss should be placed just below $25.
Intel Stock: Long Term Prospect
Income investors holding Intel have little to worry about, the company is cash rich and pays a hefty 3.43% dividend. Shares have a low beta and are ideal for conservative investors avoiding volatility.
Growth investors have grown impatient with the movement of the stock, which has traded sideways for over a decade despite the dominance and growth of Intel in the semiconductor industry. However, since 2009 the stock is undergoing a slow but steady higher top higher bottom cycle. Given the company's shift towards right direction, it is expected that the shares of the company would gather momentum and generate more alpha as soon as the worldwide macroeconomic headwinds start to resolve.