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  • Investors Will Gain In The Long Run With Intel 0 comments
    Oct 4, 2013 4:33 PM | about stocks: INTC, AAPL, GOOG, MU

    Intel Ready to Take Over Its Competitors

    'Mad Money' Host Jim Cramer Does The 'Harlem Shake' - Very interesting read

    Intel (NASDAQ:INTC) is the world's largest semiconductor chip maker by revenue. According to a recent development Intel has provided its latest microchips for iMac. This means new technology of Intel will be installed in Apple's iMac. This is an important development for Intel as it explored new business relationship with Apple. Intel with total equity of $53.84 billion is too large for its competitors and has already taken on its competitors.

    What is making Intel grow every year

    Intel being the primary choice of manufacturers of personal computers and laptops has produced increasing revenue for about 12 years, reaching total equity of $53.84 billion. And as Intel has released its new microchips like core i3, core i5 and core i7, it has grabbed attention of many users of personal computers and laptops.

    Intel covers a huge market share of 57.1% when it comes to microprocessors as compared to its competitors such as Broadcom, IBM, Nvidia, AMD etc. And this market share of Intel is expected to increase in upcoming years as Intel is looking forward to merge more companies in it, this will also increase its operating size.

    She Will Connect

    This is the name given to the new campaign of Intel directed towards increasing the digital literacy of young women in developing countries. This campaign will be aimed towards reducing the technology and gender gap. Initially, the campaign will be started in Africa with the help of various NGOs and government organizations, targeting more than 5 million women and aims to reduce the gender gap by 50%. By starting such a campaign, Intel is looking to establish its image as a socially responsible firm.

    Expanding Its Operations

    A couple of days ago Intel has announced investment in Recon Instruments. This company produces wearable computing devices and is soon going to launch most advance wearable computing device soon. However, Intel did not disclose the terms and amount of investment its going to make in Recon.

    As the decrease in demand of personal computers is painful for Intel, it has decided to pursue consumer markets while continuing its core business of developing microchips.

    On Monday, Intel announced that it would be buying Sensory Networks for $20 million. Sensory Networks produces acceleration and pattern matching software that is used in firewall to detect virus and spam. Sensory Networks is a relatively small firm with only 5 employees however, analyst see this acquisition as an important step of Intel towards boosting its capabilities outside the core business of processors.

    On Sunday, Intel announced that it would hire 800 permanent employees and 200 contract employees after micron announced last year that it would close its operations in Kiryat Gat factory. This plant was setup by Intel and was leased to Micron 15 years ago and Intel still owns the plant. According to Intel, it would make renovations in the plant and will dedicate it towards making 10 nanometer chips. This deal between Intel and Micron is expected to be finalized in the fourth quarter of this year.

    Concerns

    Intel is struggling with sales of laptops and personal computers as PC's shipment decreased by 11% this year. This is reported as worst year-over-year sales in 11 years.

    Moreover, Intel is focusing on few projects such as Recon computing wearable to generate some extra revenue but these projects not related to its core business of chip making. I think this can disappoint investors which may result in a downward pressure of Intel's share price.

    However, Intel is keen to boost its performance and that is why analysts expect Intel to make $13.732 billion of net earnings in this quarter of the year through its core business of chip making that is $1 billion more than previous quarter of this year.

    Conclusion

    I believe investors will gain in the long run as well as in the short run if they invest is INTC now, as Intel's share price is much lower than its average share price of this year.

    Moreover, as Intel is working on few projects including Recon wearable, Sensory Networks and tablets so its share price is expected to rise, as analysts also expect Intel to make $13.732 billion of net earnings in this quarter so Intel's share price is also expected to rise above $25. So I recommend a BUY on INTC.

    Disclosure: I am long GOOG, INTC.

    Additional disclosure: GuruVIX.com

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