Intel Corporation (NASDAQ/INTC) used to be a “can’t miss” bellwether technology stock, but that was when the personal computer (PC) was king and Microsoft Corporation’s (NASDAQ/MSFT) “Windows” operating system was all the rage, according to my stock analysis.
Fast-forward a few decades, and now the talk on the technology beat is focused on tablets, mobile devices, and a slew of mobile operating systems, including those from Apple Inc. (NASDAQ/AAPL), Google Inc. (NASDAQ/GOOG), Microsoft (read my thoughts on the company’s prospects in “Why Microsoft’s Only an Afterthought on Wall Street”), and Research In Motion Limited (NASDAQ/RIMM; TSX/RIM) with its upcoming “BlackBerry 10.” My stock analysis is that the commonality is the focus on the superlative growth in mobile devices and the hardware and software that powers them.
Former tech superstar Intel, according to my stock analysis, is facing hurdles. Its chips have largely been designed for the PC market, but the company has been turning its attention to building chips for mobile devices, including newer, more energy-efficient chips, something that is key in this market due to the requirement for longer-term battery life. Yet my stock analysis is that it will not be easy, as Intel has a long road ahead and will need to catch up to ARM Holdings plc (NASDAQ/ARMH), the current market leader in mobile chips.
One look at Intel’s revenue growth, and you’d understand why Intel needs to revamp its business model and turn things around. Annual revenues are estimated to decline one percent this year and grow a mere 1.8% in 2013, according to Thomson Financial. These are not the growth metrics that I’d be looking for in a tech company, based on my stock analysis.
In the equities market, the Semiconductor Index continues to show some longer-term downward movement on the chart since the beginning of 2011. The chart shows a potential bearish “pennant pattern” that points to the convergence of the upper and lower trendlines, followed by a possible downward decline to the 200-day moving average (MA), based on my technical analysis.
Chart courtesy of www.StockCharts.com
Intel, along with Advanced Micro Devices, Inc. (NYSE/AMD), has expressed caution on the global economy and growth. My stock analysis is that the superlative growth of tablets and other mobile devices is a cause, as I have previously discussed.
The production of PCs is estimated by Gartner to decline 2.5% this year and continue to be “weak” in 2013. (Source: “Chip Revs Off 3% in 2012, To Grow 4.5% In ’13, Gartner Says,” Forbes, December 13, 2012.) This is a red flag, according to my stock analysis.
For success, my stock analysis is that companies such as Intel and AMD must adapt to the new realm of mobility and shift their focus to making chips for the next generation of tablets and smartphones. It’s a start, but there is a lot of catching up to do.