Ready to Finish 2012 Strong
Maxwell is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Intel (NASDAQ: INTC) showed stability through the second quarter while weathering unfavorable macroeconomic conditions. Significant growth in future revenue and market share will be driven by Intel's inevitable penetration in the growing smartphone and tablet sectors. Intel has a number of promising products in its pipeline that will align it alongside Google (NASDAQ: GOOG), Microsoft (NASDAQ: MSFT) and eventually Apple (NASDAQ: AAPL) in order to obtain a leadership position across all PC sectors. Intel is also making investments in R&D in order to help the industry evolve with the demands on technology. Intel's direct competitors, ARM Holdings (NASDAQ: ARMH) and Advanced Micro Devices (AMD) will have a hard time keeping pace as Intel is poised to put a stronghold on the PC industry from nearly every vantage point.
Intel has maintained strong financials throughout 2011 and so far in 2012 in its core functions pertaining to its PC Client and Data Center platforms. Both of these divisions generated significant revenues through the second quarter as they had done in the past. During the second quarter, Intel's PC Client Platform increased unit volumes sold by 3% sequentially and by 7% year on year (YOY), while average selling prices decreased by 2% sequentially and YOY. The Data Center Platform increased unit volumes sold by 11% sequentially and 4% YOY. These average selling prices increased by 3% sequentially and by 12% YOY during the second quarter. Intel's PC Client Group revenue in the second quarter was $8.7 billion, increasing by 3% sequentially. Data Center Group revenue was $2.8 billion, increasing by 14% sequentially. Intel's total revenue was $13.5 billion in the second quarter, increasing by 5% sequentially. Market share in Asia and America remain strong as they constitute 58% and 21% of Intel's revenue, respectively. Intel finished the second quarter with $4.7 billion in cash from operations. Intel's total return for the past 12 months is around 20.5%, while AMD is at -42% and ARM Holdings is around -2.7%. In contrast to Intel, AMD's revenue for the second quarter decreased by 10% while its profits decreased by 40% due to poor sales in Europe and China.
Intel is in the position to add to its current success by entering the mobile PC markets as well. ARM Holdings has been the leading provider for smart phone processing platforms but Intel is already making strides in 2012 to change that. Intel is currently working on Atom processors that will have 3G, 4G and LTE capabilities that will be released later this year. Intel developed the new Medfield chips that have enabled different smartphone manufacturers in Europe, China and India to use Intel to support Google's Android 2.0 software in its products. Motorola will be using the Intel processor in its smartphones in the second half of 2012. Intel has already developed platforms for Android 2.0, with a pending upgrading for Android 4.0 and the new processing platform for Android 4.1 on the horizon as well.
Intel has the expertise and savvy to fabricate single core processors with hyperthreading that are more power efficient and comparable to the dual processors ARM Holdings is currently providing for smartphones. Intel is currently focusing on Google's Android due to overwhelming consumer demand. The Android OS has the largest worldwide market share in smartphones by far. As Apple's iOS continues to evolve and Microsoft's Windows phone proves to be a viable competitor, Intel will provide processors for these smartphones and iPad as well. Apple already started using Intel chips in its computers years ago and over 20 of the new touch-screen tablets and laptops that will feature Windows 8 are already being built from Intel's 140 different Ivy Bridge-based designs.
Intel is also making significant investments in its R&D opportunities looking forward; in the second quarter Intel spent $4.6 billion on R&D and MG&As. Intel recently announced an agreement with ASML on R&D funding and equity investments totaling $4.1 billion to accelerate lithography and EUV developments for wafer size advancements in the semiconductor industry in exchange for a 15% of ASML's shares. This will lead to improvements in productivity for semiconductor manufacturers in the entire industry and it will strengthen Intel's leadership position among its competitors. Intel also recently announced a renewed focus and aggressive agenda for pursuing ventures and opportunities through its Intel Capital division in Israel. It recently hired two veteran venture capitalists from the area and Intel's focused on capitalizing on opportunities ranging from high tech, startups, internet applications, communications infrastructures, mobile devices, consumer digital products, vehicles and energy, social networks or anything with promising financial return for the future.
Intel is maintaining success in its current operations and has promising opportunities in growing mobile markets worldwide while making sound investments to expand and strengthen its global portfolio for the long-term. This is one of the most stable assets in the market poised for substantial capital appreciation and revenue growth in the near future driven by demand for ultrabooks, tablets, smartphones, sophisticated servers and laptops as well.
StockCroc1 has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, Intel, and Microsoft. Motley Fool newsletter services recommend Apple, Google, Intel, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.