Intel Corp - Stocks

Instrument description

Computers have transformed lives all over the world and become an essential component in every household, office, factory, education and healthcare institutions, and financial businesses. The one word that comes to people’s minds with the word computer is ‘Intel’ that provides all the essential elements that make the computer function properly.

Intel is an American multinational technology company involved in designing, manufacturing, marketing, and distributing a wide range of computer parts that includes semi-conductor chips, integrated circuits, embedded processors, flash memory, motherboard chipsets, graphic chips, and network interface controllers.

Intel is based in the iconic Silicon Valley in Santa Clara, California, and the world’s largest manufacturer and seller of semi-conductor chips. Intel is the pioneer of ‘X-86’ series of microprocessors, which are mostly found in personal computers. In 2018, Intel was ranked at 46 in the Fortune 500 list of US business companies based on total revenue.

Intel is the main supplier of microprocessors to other global technology brands that include Apple, HP (Hewlett Packard), Dell, and Lenovo. Intel has nearly 110,800 employees, and mostly the revenue is generated from four countries that are US, Taiwan, China, and Singapore. Intel has a 15% market share in the semi-conductor chip segment, and the company posted revenue of $71.97 billion in 2019.

History of Intel

Robert Noyce and Gordon Moore were two scientists who formed Intel on July 18, 1968. The company designed and developed DRAM (Dynamic Random Access Memory). In 1971, Intel introduced the first microprocessor, and it also started trading publicly on October 13, 1971, and the stock value was priced at $23.50 per share. Intel is incorporated in Delaware.

The name ‘Intel’ holds symbolic value, and it is a combination of two words that are ‘Integrated’ and ‘Electronics.’ The co-founder and scientist Robert Noyce played crucial part in making of the integrated circuit. The name ‘Intel’ is also used to represent Intelligence Information.

In 1974, Intel launched the first microprocessor for general purposes. IBM became the first company to use Intel’s microprocessor in its personal computer in 1980. Most of the business of Intel till 1981 was manufacturing DRAM and SRAM (Static Random Access Memory) memory chips. The company generated more than $1 billion for the first time in 1983. The net incomes increased more than $1 billion for the first time in 1992.

Intel debuts the iconic ‘Pentium’ chipset in 1993, which was a fifth-generation chip. The revenue of the company passed $20 billion, and net income touched $5 billion in 1996. Intel introduced the Pentium II microprocessor in 1997. The Pentium III microprocessor was launched in 1999, and Intel also became a member of the Dow Jones Industrial Average (DJIA).

In 2000, Intel introduced the first 1 Giga Hertz processor in the market. The all-time highest stock price of Intel shares was $74.88 on August 31, 2000. Intel performed exceptionally well in 2019, and revenue growth was 8%, and the Data Center unit witnessed strong growth. The company performed better than was expected, particularly when it came to revenue generation and Earnings per Share (EPS).

In 2006, Intel sold its XScale processor for $600 million to Marvell Technology Center. Intel bought McAfee, a computer security software maker, for $7.68 billion in 2010. In March 2011, Intel acquired the majority of assets of SySDSoft, which was based in Cairo, and in the same year in July, Fulcrum Microsystems Inc. was also acquired by Intel.

In 2014, Intel acquired PasswordBox, and in 2015 a 30% investment is done in Vuzix, and it is valued at $24.8 million. Also, Saffron Technology, a company providing cognitive computing, was acquired in 2015. Apart from acquisitions, Intel has done many valuable joint ventures over the years. In 2011, Intel agreed to work with Chinese ZTE Corporation to make smartphones that would be equipped with Intel’s Atom processor.

Current Business and Investment of Intel

Intel is a global brand in the technology sector and delivers premium and wide range of computer equipment that includes microprocessors, data storage devices, networking hardware and solutions, and communications platforms. Intel functions in particular groups that are called Client Computing Group (CCG), Internet of Things Group (IOTG), Data Center Group (DCG), Programmable Solutions Group (PSG), Non-Volatile Memory Solutions (NSG), New Technology Group (NTG), and Intel Security Group (ITG).

• Client Computing Group manages the design and development of platforms suited for desktops, notebooks, tablets, smartphones, mobile communication devices, and wired and wireless connectivity products
• Internet of Things Group provides embedded applications and computing solutions for various sectors of the market such as retail, healthcare, automotive, energy, and manufacturing
• Data Center Group overlooks the optimized platforms and components for the cloud, enterprise, and communication segments. The components are used in the network, storage platform, and servers.
• Programmable Solutions Group is involved in providing programmable semi-conductors for different markets that include communication, industrial, automotive, and data centers.
• Non-Volatile Memory Solutions produces NAND (Not AND) flash memory that is used in solid-state hard drives.
• Intel Security Group usually develops software mostly for security and includes antivirus and malware software.

Intel is also known to be an Original Equipment Manufacturers (OEMs), a provider for cloud and communications service, Original Design Manufacturers (ODMs), and also automotive, and industrial equipment. Intel offers numerous applications that allow integration of microprocessors with a Stand-Alone System on a chip (SOC) or a multichip. Samsung claimed the top spot for Number One chipmaker in 2017 and 2018, but Intel regained the spot in 2019.

Risk and Potential in Intel Environment

Intel is a leading global brand in the field of Information Technology (IT). The company is a pioneer in developing the most efficient, robust, and durable microprocessors and other essential components that are necessary for the seamless performance of a computer. Intel offers its products and services to both common everyday consumers and large business enterprises. The SWOT analysis is a common technique that allows big organizations to measure their current performance, overcome weaknesses, and try to take advantage of the opportunities for future growth. The SWOT analysis of Intel is given by

• Strengths

Intel holds a legacy for delivering faster, better, and innovative chipsets for computers. Intel is a market leader in semi-conductors and microprocessors that are widely used in desktops, laptops, and mobile computing devices. The company has a presence all over the world, and numerous acquisitions and joint ventures have increased the brand value. Intel spends heavily on Research and Development (R&D) that allows the company to remain a trendsetter. The marketing campaigns of the company are also relevant and deliver the company’s message clearly, like the one ‘Intel Inside’ that became popular all across the world.

• Weaknesses

Intel, on numerous occasions, has manufactured more semi-conductor chips than was needed that led to overproduction and flooding in the market. The company is confined to the personal computer segment and must redefine its strategy as the world is moving towards mobile technology. The market share of Intel is declining after every year due to intense competition. The technical service and assistance are brilliant in developed countries, but the service levels are not optimum in developing countries.

• Opportunities

Intel has all the required resources and skills to develop in the mobile hardware and software segment, which will help the company to grow. Intel can acquire smaller and startup tech companies to diversify its segments and boost revenue. The demand for smartphones will increase, and Intel can develop a revolutionary chip for smartphones. The automotive industry is quickly moving towards driverless vehicles, and Intel can step in and deliver high-quality chips and processors needed for future driverless vehicles.

• Threats

Intel faces tough competition from Toshiba, Samsung, Advanced Micro Devices (AMD), Qualcomm, STMicroelectronics, Nvidia, Silicon Integrated Systems, and Texas Instruments. Intel relies mostly on its chipsets and needs to diversify its portfolio. There are numerous Chinese tech companies that have started to develop and sell processors. Intel is lagging in the mobile and portable segment, and all the major smartphone companies are relying on Qualcomm instead of Intel.

Stock Analysis of Intel

Intel Corp. is listed and actively trades on the NASDAQ with the ticker symbols ‘INTC.’ The company is listed under the ‘Electronics Technology’ Sector, and the industry is ‘Semi-conductors.’ Intel is also a member of other indices such as the NASDAQ-100 Index, Dow Jones Industrial Average (DJIA), S&P-100 Index, and S&P-500 Index

The all-time high share price of Intel was $74.88 on August 31, 2000, and the average price in the last 52 weeks is $56.72.

To keep up with the technological pace and modern trends, Intel made heavy investments in nearly 11 startups worth $132 million, and it was done to improve expertise and functionality in artificial intelligence, chip design, and automatic computing. The Coronavirus pandemic has affected business across all sectors of the market, and Intel’s stock value has also been impacted.

The share price rose at the start of the year but fell due to the Covid-19 outbreak. The tech giant dominated computer technology, but its value has declined with the emergence of smartphones and wireless devices. The semi-conductor industry, on the whole, had a decline in 2019, and Intel’s revenue slipped to $65.8 billion, with a 0.7% decrease.

However, Intel posted better than expected financial results in the first quarter of 2020. The revenue of the company was $19.8 billion, with a 23% increase, the earnings rose 63% YoY (Year on Year), and sales also surged 23%. The PC chip sales increased 14% YoY in the first quarter. The Coronavirus pandemic compelled people to stay at home, and children were asked to attend online lectures that led to an increase in PC sales in March 2020.

In the second quarter, Intel expects a 4% increase in earnings and a 12% increase in sales, but the company faces direct competition from AMD in the PC and server segments. Intel expects earnings at $1.10 and sales to be $18.5 billion. The company is taking steps to increase the cloud and networking business, do advancements in 5G technology and artificial intelligence. Analysts predict that Intel’s sales will rise by 2.3% in 2020, but earnings will fall by 1.8% in 2020. In the second quarter, Intel posted revenue of $19.7 billion, and EPS was $1.23. The information above is for education purposes only and cannot be considered as investment advice. Past performance is not reliable indicator of future results.