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,

A Tale of Two Stocks Intel and Apple

From time to time I like to go back and take a historical look at stocks. I am thinking about buying some Intel. I also decided to look at Apple.

If you look at the Intel chart below you will notice it was trading in the $15 a share area back in 2002 (after a high around $75).

At the same time in 2002, Apple was trading around $8 a share.

So where are they now? Intel is trading around $13 a share, and Apple is trading around $90 a a share.

I guess this shows that if you buy good stocks you'll make money in the markets (unless you bought Apple at $200).

Which is the better buy right now Intel or Apple?

clipped from charts.barchart.com clipped from charts.barchart.com

In our article, "Early Warnings Signaling An Ugly Earnings Season", who warned of further layoffs ahead?

Question: In our article, "Early Warnings Signaling An Ugly Earnings Season", who warned of further layoffs ahead?

Answer: Alcoa

Early Warnings Signaling An Ugly Earnings Season

By JEFF COX

If the plotline for 2009 was to start the year with an optimistic bang, corporate America doesn't seem to be following the script.

Before anyone had the chance to soak in the early-year rally, a slew of big companies have come along with earnings warnings to temper the enthusiasm.

The warnings—from giants Alcoa, Intel and Time Warner—were a big factor in the selloff in stocks on Wednesday.

Moreover, these early warnings are expected to be just the first few rumbles in an avalanche of dour outlooks to come.

"It's going to be ugly," said Tom Higgins, chief economist at Payden & Rygel in Los Angeles. "We're certainly not through the thick of it...I think you're going to see a horrible earnings season."

Analysts expect consumer-sensitive areas such as retail and parts of technology to be among the hardest hit as rising unemployment squelches consumer spending and hurts revenue and earnings. Even President-Elect Obama's plan for a massive stimulus package isn't expected to have much impact until later this year.

"While we do anticipate that monetary policy will gain traction over the course of 2009, I don't think you'll see any impact on consumer spending and business spending that would make optimistic about equity prices at this point," says Higgins, who sees consumer spending rebounding perhaps in the third or fourth quarter this year.

While there's hopes for a turnaround later this year, Higgins says the economy has more difficult times to weather before that happens.

"Analysts have been way too optimistic all the way up to this point," he adds. "After this quarter you may start to see where they'll be playing catch-up to the downside...and maybe we'll see more rational expectations for earnings. Right now I think we have more downside than upside on earnings."

Here's a snapshot of the warnings so far:

Media conglomerate Time Warner (NYSE: TWX) said Wednesday it expects to record a charge of about $25 billion in goodwill writedowns, leading to a loss in the fourth quarter.
Microchip maker Intel (NASDAQ: INTC) said its fourth-quarter revenue was likely worse than expected due to weaker global demand for personal computers. The company said its quarterly revenue was likely about $8.2 billion, down 23 percent from a year earlier.
Aluminum giant and Dow component Alcoa (NYSE: AA) said it would slash more than 15,000 jobs, halve capital spending and sell four businesses as it reduces aluminum production in the face of the global economic downturn. The company said it imposed a global salary and hiring freeze as it seeks to cope with what Chief Executive Officer Klaus Kleinfeld called "extraordinary times."
-- Reuters contributed to this report.

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