Will Product Innovation Carry This Tech King Higher In 2013?
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) announced that it has collaborated with Facebook to define the next generation of rack technologies used to power the world’s largest data centers. The companies also unveiled a prototype built by Quanta Computer. Intel's collaboration with Facebook will add to its already powerful product growth story in 2013.
Intel reported 2012 full-year revenue of $53.3 billion, operating income of $14.6 billion, net income of $11.0 billion, and earnings per share (EPS) of $2.13. The company generated $18.9 billion in cash from operations, paid dividends of $4.4 billion, and used $4.8 billion to repurchase 191 million shares of stock. Its Data Center Group generated revenues of $10.7 billion, up 6% from 2011.
Intel posted fourth quarter revenue of $13.5 billion, operating income of $3.2 billion, net income of $2.5 billion, and EPS of 48 cents. The company generated approximately $6 billion in cash from operations, paid dividends of $1.1 billion, and used $1.0 billion to repurchase 47 million shares of stock. It recorded a gross margin of 58%, 1.0 percentage point above the midpoint of the company's expectation of 57%. Its Data Center Group generated revenue of $2.8 billion, up 7% sequentially and up 4% year-over-year.
"The fourth quarter played out largely as expected as we continued to execute through a challenging environment," said Paul Otellini, Intel's President and CEO. "We made tremendous progress across the business in 2012 as we entered the market for smartphones and tablets, worked with our partners to reinvent the PC, and drove continued innovation and growth in the data center. As we enter 2013, our strong product pipeline has us well positioned to bring a new wave of Intel innovations across the spectrum of computing."
Multiple Product Introductions
Intel’s new offerings in 2012 included a diverse mix of tablets, smartphones, and products of long-term investment in Intel’s manufacturing division. The company unveiled its Intel Xeon Coprocessor Support and new server motherboard a few months ago. It showcased its Ultrabook convertibles with touch, tablets, and phones. It announced the development of the world’s first 6-watt, 64-bit server class SoC for microservers. The company collaborated with Bougues Telecom to bring Live-and-On-Demand television to Intel-based devices. It recently announced retail deployments that could save billions of dollars. It also unveiled the itanium processor to deliver breakthrough capabilities for mission critical computing.
The new architecture created by Intel and Facebook is based on more than a decade of research to invent a family of silicon-based photonic devices, including lasers, modulators, and detectors using a low-cost silicon to fully integrate photonic devices of unprecedented speed and energy efficiency.
“The disaggregated rack architecture includes Intel’s new photonic architecture, based on high-bandwidth, silicon photonic technology that enables fewer cables, increased bandwidth, further research, and extreme efficiency compared to today’s copper-based interconnects,” said Justin Rattner, Intel’s chief technology officer.
How is Intel performing compared to its rivals? With a gross margin of 63.28%, compared with 15.41% for Advanced Micro Devices (NYSE: AMD), 20.93% for Dell (NASDAQ: DELL), and 48.51% for Texas Instruments (NASDAQ: TXN), and EPS of 2.13, compared with -1.60 for Advanced Micro Devices and 1.51 for Texas Instruments, Intel does appear to be in a competitive position. With Intel's collaboration with Facebook, it will counter Dell's recent release of Latitude 10 Essentials, Texas Instrument's voltage-controlled oscillator, and Advanced Micro Devices' newly launched server motherboard. Intel generated a net income of $11 billion in the fourth quarter of 2012, compared with -$473 million for Advanced Micro Devices, its closest rival.
Based on Intel’s 2012 financial statements, it is clear that it has been making profits due to the multiple products it introduced into the market in 2012. It is noticeable that it has been able to maintain profit levels relative to past quarters. In addition, the company is not off the mark when its 2012 results are compared with those of 2011. Intel is operating at an efficient level.
Looking at the multiple product introductions and profitable margins, Intel appears to be a solid buy at the moment.
StockCroc1 has no position in any stocks mentioned. The Motley Fool recommends Intel. The Motley Fool owns shares of Intel. 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. Is this post wrong? Click here. Think you can do better? Join us and write your own!