Constant innovation is the key to growth for Intel

The computer chip makers who will prosper in the coming years are those who adapt best to new trends. These include the growth of mobile technology, such as smartphones and tablet computers, which is hurting demand for traditional desktop and laptop computers. Here is how one of the leaders in the field, Intel Corp., which we cover in our advisory on U.S. stocks Wall Street Stock Forecaster, aims to meet these challenges. INTEL CORP. $23 (Nasdaq symbol INTC; www.intel.com) is the world’s leading computer chip maker. Its products power 80% of the world’s personal computers. In the three months ended June 29, 2013, Intel’s sales fell 5.1%, to $12.8 billion from $13.5 billion a year earlier. Sales of personal computer chips (which supply 63% of Intel’s total sales) fell 7.5%, while sales of chips for server computers were flat. Earnings declined 29.3%, to $2.0 billion from $2.8 billion. Due to fewer shares outstanding, earnings per share fell 27.8%, to $0.39 from $0.54.

Tech stocks: Intel continues to increase spending on new chips

Intel continues to invest heavily in innovative new chips in order to stay ahead of the competition. It spent $2.52 billion (or 19.6% of its sales) on research in the latest quarter, up slightly from $2.51 billion (or 18.6% of sales) a year earlier. The company is devoting a large portion of its research spending to new chips for smartphones and tablet computers. These products include its Atom chips, which use new technology that makes them highly energy efficient. The company is now using this technology to make desktop and laptop computer chips that use less energy. The company will probably earn $1.85 a share in 2013, and the stock trades at 12.4 times that forecast. The $0.90 dividend yields 3.9%. In the latest edition of Wall Street Stock Forecaster, we examine further Intel’s efforts to stay ahead of the competition, including the company’s cash flow and debt. We conclude with clear buy-hold-sell advice on the stock. (Note: If you are a current subscriber to Wall Street Stock Forecaster, please click here to view Pat’s recommendation. Be sure to log in first.) COMMENTS PLEASE—Share your investment experience and opinions with fellow TSINetwork.ca members Do you think technology giants like Intel, Apple, Google and others are moving into the predominant position that iconic manufacturing and industrial stocks like General Motors or U.S. Steel held for many years on the market? Or do you think that these stocks are still vulnerable in the face of rising competitors and rapid changes in technology? Let us know what you think.

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