Thursday, January 26, 2012

Intel INTC) 2012 Review

Intel Corporation (INTC)is a leading manufacturer of integrated circuits (microprocessors, notably Pentium, microcontrollers, memory chips) and computer modules and boards to personal computer, communications, industrial automation, military and electronic equipment markets. 

While profits are somewhat cyclical, the company has grown its dividend at a 28% annual rate over the past ten years earning a 10-20% return on equity. Despite the adverse Market conditions in 2008/2009, Intel should continue to lead the rapid growth in the semiconductor industry because:

(1) its processors are characterized by greater functionality and lower cost than its competition,

(2) expected acceleration in server demand,

(3) its outstanding R&D effort continues to develop industry leading products. The latest include Nehalem for desktops and Atom for smart phones,

(4) enterprise spending is again on the up trend,

(5) its recently formed partnership with Google to introduce android based products into the tablet and smart phone markets,

(6) the acquisition of McAfee provides an intro into the mobile security market.


(1) it has been slow to introduce products into the consumer market,

(2) it is lagging competition in graphics processing,

(3) the iPad is taking market share from the PC,

(4) legal problems resulting from questionable marketing tactics.

INTC is rated A++ by Value Line, has 4% debt to equity ratio and its stock yields 3.7%.

Statistical Summary

Stock Yield Dividend Growth Rate Payout Ratio # Increases Since 2002
INTC 3.7% 11% 34% 8
IND 2.1 9* 50 NA

Debt/Equity ROE EPS Down Since 2002 Net Margin Value Line Rating
INTC 4% 22% 3 22% A++
IND 15 22 NA 18 NA

*most companies in INTC industry do not pay dividends


Note: INTC stock made good progress off its March 2009 low, surpassing the down trend off its December 2007 high (straight red line) and the November 2008 trading high (green line). Long term, it is in a trading range; the blue line is the lower boundary. Intermediate term is in an up trend (purple lines). The wiggly red line is the 50 day moving average. The Dividend Growth Portfolio does not own INTC. The upper boundary of its Buy Value Range is $13; the lower boundary of its Sell Half Range is $29.

Steve Cook received his education in investments from Harvard, where he earned an MBA, New York University, where he did post graduate work in economics and financial analysis and the CFA Institute, where he earned the Chartered Financial Analysts designation in 1973. His 40 years of investment experience includes institutional portfolio management at Scudder, Stevens and Clark and Bear Stearns. Steve's goal at Strategic Stock Investments is to help other investors build wealth and benefit from the investing lessons he learned the hard way.