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....

Exchange-traded funds (ETFs) are set up to mirror the performance of a stock-market index or subindex. They hold a more-or-less fixed selection of securities that represent the holdings that go into the calculation of the index or sub-index.

ETFs trade on stock exchanges, just like stocks....

Advanced Micro Devices Inc., $3.75, symbol AMD on New York (Shares outstanding: 714.5 million; Market cap: $2.7 billion; www.amd.com), makes computer chips. The company produces microprocessors for desktops, laptops and servers, including its Athlon, Turion and Opteron designs, which are compatible with Microsoft Windows applications. AMD also makes circuits for communications equipment and graphics processors through ATI, which it bought for $5.4 billion in 2006. AMD continues to face strong competition from other chipmakers. At the same time, more consumers are switching to mobile devices and away from desktops and laptops. That’s cutting demand for the company’s chips....

Like Cisco (see page 71), sales and earnings growth at these four technology giants have waned, as they turn into traditional cyclical growth stocks that are more sensitive to swings in the overall economy.

However, they are still leaders in their fields....

One of today’s most dated investment terms is “tech stocks”. You’ll hear the term flung about as if it referred to well-defined groups of stocks such as the oils, the mining stocks or the banks. The difference is that changes in the price of oil have a direct impact on oil company profits and oil stock prices. Changes in mineral prices have a direct impact on mining company profits and stock prices. Changes in interest rates and in bank legislation have a direct impact on bank profits and bank stock prices. But there is no over-riding factor that influences the so-called tech stocks as a group. The term made more sense in the 1990s and before, when technology companies were in a much earlier stage of their corporate development. Back then, shares of these companies did tend to move as something of a loosely connected group. That was mainly because investors had limited information on which to base their views of many of these stocks, and decide how much to pay for them. Now, however, you might say the group has matured. The stocks it covers have differentiated. Stocks that qualify as “techs” still include a lot of companies that are little past the start-up phase and are highly speculative. But it also includes stocks issues that qualify as traditional growth stocks....

INTEL CORP. $23 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 5.0 billion; Market cap: $115.0 billion; Price-to-sales ratio: 2.2; Dividend yield: 3.9%; TSINetwork Rating: Above Average; 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.

Intel continues to invest heavily in new chips. 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.

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INTERNATIONAL BUSINESS MACHINES CORP., $206.35, New York symbol IBM, is paying an undisclosed sum for SoftLayer Technologies. Based in Dallas, Texas, this privately held firm sells online data-storage space and related services to 21,000 business clients. It has 13 data centres in the U.S., Asia and Europe. IBM expects to complete this purchase by September 30, 2013. Demand for cloud computing, which mainly involves storing data on remote, secure servers, is growing strongly. That’s because it gives cost-conscious businesses access to better services and software without the high cost of buying and setting up their own servers. SoftLayer’s technology will enhance IBM’s cloud-computing expertise and help it increase its annual revenue from this field to $7 billion by 2015. To put that in context, IBM’s total revenue was $104.5 billion in 2012....

POWERSHARES QQQ ETF $70.39 (Nasdaq symbol QQQQ; buy or sell through brokers; www.invescopowershares- .com), formerly called Nasdaq 100 Trust Shares, holds stocks that represent the Nasdaq 100 Index. That index consists of the 100 largest shares on the Nasdaq exchange, based on market cap.

The Nasdaq 100 Index contains shares of companies in a number of major industries, including computer hardware and software, telecommunications, retail/wholesale trade and biotechnology. It does not contain financial companies. The fund’s expenses are about 0.20% of its assets.

The index’s highest-weighted stocks are Apple, Microsoft, Qualcomm, Google, Cisco Systems, Intel, Amazon.com, Oracle Corp., Comcast Corp. and Amgen.
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SYMANTEC CORP., $24.35, Nasdaq symbol SYMC, sells computer-security technology, including anti-virus and email-filtering software, to businesses and consumers. In its fiscal 2013 fourth quarter, which ended March 29, 2013, Symantec’s revenue rose 4.0%, to $1.75 billion from $1.68 billion a year earlier. That beat the consensus revenue estimate of $1.73 billion. The company is doing a good job of selling its products as ongoing subscriptions instead of one-time purchases. Subscriptions now account for 44% of Symantec’s sales to consumers and 14% of its sales to businesses. Earnings rose 11.0%, to $314 million from $283 million. Symantec spent $125 million on share repurchases in the latest quarter. Due to fewer shares outstanding, earnings per share rose 15.8%, to $0.44 from $0.38. These figures exclude costs related to the company’s plan to lay off 30% to 40% of its managers and streamline its product lines. On that basis, the latest earnings exceeded the consensus estimate of $0.38 a share. Symantec continues to spend around 15% of its revenue on research....

Most U.S. markets have risen lately, while Canada’s resource-heavy Toronto Stock Exchange has lagged. But as always, both remain subject to unexpected downturns. Even so, the long-term outlook is for higher stock prices.

One way to profit from rising markets is to add exchange traded funds (ETFs) that track major stock indexes to your portfolio.

ETFs trade on stock exchanges, just like stocks....