Intel Corporation

NVIDIA CORPORATION (NVDA)

12,17 USD 
-0,65% | -0,08 
 18/01/2013 22:00

Why Nvidia Is Heading To $22

May. 9, 2014 1:31 PM ET  |  About: NVDA

Summary

• Following the recent retreat, the stock is worth a gamble here for the long term.
• The risk-reward trade-off favors the upside.
• If Nvidia can maintain revenue growth rate of 10% for the next couple of years, this company can become a legitimate competitor to Qualcomm and Broadcom.

With the ongoing struggles in the semiconductor industry, it continues to amaze how chip giant Nvidia (NVDA), which has performed above expectations, can never be given the benefit of the doubt. Despite having shown a track record of consistent outperformance, the company is always discussed in the context of management's ability to change its chip strategy.

But the numbers have shown that the transition away from the a PC-dependent business is on, if not ahead of schedule. And it continues to be a mistake to assume that Nvidia will never emerge on to the mobile stage with market leaders Qualcomm (QCOM) and Broadcom (BRCM). And following Nvidia's first-quarter earnings beat, investors would do well to not underestimate one of the best managed companies on the market.

Revenue jumped 16% year over year to $1.1 billion, which easily beat Street estimates. The company enjoyed a solid performance from its core PC graphics processor segment, which posted a 14% year over year jump in revenue to $898 million. This occurred even amid the persistent slowdown in the personal computer market. Nvidia has been able to offset declines in its notebook market shrank with strong-than-expected demand for its advanced graphics chips. These are the types that are in high-end notebooks, which posted growth due to its gaming features.

Even more impressive was the 35% jump in revenue from Nvidia's Tegra processor business, which grew to $139 million. This is an important business for the company, which shows that meaningful progress is being made in the realm of mobile gadgets and automobiles. Recall, two months ago, Nvidia showed off a self-driving Audi that was powered by a Tegra processor. And now the company's Tegra line of chips are powering thing like entertainment and navigation systems in cars made by (among others)Tesla (TSLA).

From an operational perspective, gross margin rose both sequentially and year over year, leading to an 83% year-over-year jump in profits and an 85% jump in earnings per share. With strong expense controls, which lead to a 4% decline, management achieves a gross margin of non-GAPP 55.1%.

All told this was by-far the best performance among all of the chip names. But investors weren't pleased with what management had to say about guidance, including seasonal weakness in demand for graphics chips, those used in low-end laptops. Management projected a second-quarter GAAP gross margin of 53.7 percent and non-GAAP gross margin of 54 percent. But I don't think it's time to panic.

Amid all of the PC-related doom, which continues to weigh on rivals includingIntel (INTC), Nvidia delivered as solid a performance as could have been expected, beating estimates on revenue and earnings per share. Not only is Nvidia's Tegra line of chips gaining traction, but the costs to grow market share have not adversely impacted the company's operating margin.

Also encouraging is the fact that Nvidia continues to secure business fromMicrosoft (MSFT) and Google (GOOG) (GOOGL) where the Tegra is a key component inside their respective devices. Device manufacturers have embraced that Tegra's features such as low power consumption coupled with high performance makes this series one of the best chips on the market today and well into the future.

From my vantage point, if Nvidia can maintain revenue growth rate of 10% for the next couple of years, while also growing its Tegra market share, this company can become a legitimate competitor to Qualcomm and Broadcom. Accordingly, with the stock trading at around $18 per share, I project fair value to reach $20 to $22 in the next 12 to 16 months. Following the recent retreat, the stock is worth a gamble here for the long term. The risk-reward trade-off favors the upside.

QUALCOMM INC COM USD0.0001 (QCOM)

64,68 USD 
-0,70% | -0,46 
 18/01/2013 22:00

ARM HOLDINGS (ARM)

861,00 GBp 
+0,64% | +5,50 
 18/01/2013 17:35

ADVANCED MICRO DEVICES INC COM USD0.01 (AMD)

2,46 USD 
-10,22% | -0,28 
 18/01/2013 22:00





INTEL CORP (INTC)

21,25 USD 
-6,31% | -1,43 
 18/01/2013 22:00

Intel Corporation (NASDAQ:INTC) Surpassed Advanced Micro Devices, Inc. (NYSE:AMD); Despite Revenue Plunged 3% in 4Q

January 18, 2013   |  By Brandon Miller

Intel Corporation (NASDAQ:INTC), the world’s largest chipmaker, announced its most anticipated fourth-quarter net income, plunged 27 per cent from the previous year over continuous weak PC sales under its CEO, Otellini, who was tapped as CEO in 2005. Otellini has survived years of great tumult as he battled with antitrust regulators in Europe and the U.S. both federal and from New York State over issues concerning to its competitors Advanced Micro Devices, Inc. (NYSE:AMD).

Intel Corporation (NASDAQ:INTC)’s net income was US$2.47 billion, or 48 cents per share for the quarter from October to December that was less than a year ago net income of US$3.36 billion, or 64 cents per share. Intel is hoping that the next CEO will at least have a fighting chance to play off some of the company’s investments, and come out looking clever and exceptional to make it viable under current market trends.

The average poll of analysts by FactSet were still beaten by Intel Corporation (NASDAQ:INTC) in earnings expectations for the quarter by 3 cents per share. This all was achieved by the chip maker due that was due to slightly higher-than-expected prices for its chips and also due to lower-than-expected costs for starting up new production lines.

Intel Corporation (NASDAQ:INTC)  is competing well with its low-power chips now arriving from Intel appear  are having an edge on the ARM Holdings plc (ADR) (NASDAQ:ARMH)-based designs from QUALCOMM, Inc. (NASDAQ:QCOM), NVIDIA Corporation (NASDAQ:NVDA) and others in this Industry. Finally, now Intel low-power chips are running in many smartphone and tablet. Company has also started to win value in the industry with the idea of becoming a contract chip maker able to compete with, Samsung, TSMC and Global Foundries.

Otellini managed to fix the business of Intel’s server chip after it had fallen behind AMD’s, with a move that has left Advanced Micro Devices, Inc. (NYSE:AMD) near collapse and Intel making huge profits in the data center. The main source of Intel’s success is its entry into a true software powerhouse through a series of high-profile hires and acquisitions. Otellini also bought McAfee for $7.6 billion.

Intel’s revenue plunged 3 per cent to US$13.5 billion by matching the analyst expectations.

Advanced Micro Devices, Inc. (NYSE:AMD) stock fell -3.28% to $2.65 in after hours trading, Intel Corporation (NASDAQ:INTC) stock plunged -5.29% to $21.48 in after hours trading. ARM Holdings plc (ADR)(NASDAQ:ARMH) stock surged 1.05% to $41.35 in last trading session, NVIDIA Corporation(NASDAQ:NVDA) stock fell -0.33% to $12.21 in after hours trading,  QUALCOMM, Inc.(NASDAQ:QCOM) stock traded down -0.07% to $65.09 in after-hours.

BUSINESS > COMPANIES > INTEL CORPORATION

	LAST	CHANGE	VOLUME
DELAYED 1:20 PM ET	$19.22	–0.02 –0.10%	37.6M
REAL-TIME 1:35 PM ET	$19.24	0.00 0.00%
What's This?

Intel Corporation

INTC: Nasdaq; Technology/Semiconductors

OTHER EXCHANGES: Mexico, Hong Kong Limited, More »

Paul Sakuma/Associated Press

Updated: Oct. 13, 2010

The Intel Corporation is the leading maker of semiconductor chips and is known for its quest to make computer chips ever smaller, faster and cheaper. It also makes circuit boards and other semiconductor products, which are the building blocks of computers, servers, consumer electronics and communications devices.

Intel supplies about 80 percent of the PC microprocessor chips worldwide.

From 2008 to 2010, the dominant companies in the PC industry faced a constant stream of disappointment as their largest corporate customers put off replacing computers. A generation of faster chips, new software and bigger hard drives came and went with disappointing sales, as the big corporate buyers gave up on their tradition of replacing two-year-old machines.

Intel's fortunes underwent a profound shift during the period. The company was one of the first to feel the brunt of the recession and a global clampdown on technology spending. As a result, its sales plummeted at record rates. But it was also one of the first technology companies to benefit from renewed consumer interest in computers, specifically laptops, and its results in 2010 reflected this enthusiasm for new machines.

Intel reported record sales during the second quarter of 2010, and predicted that sales in its third quarter would end up far better than expected, as large companies had finally started to buy new PCs. Revenue for the quarter were 34 percent above the second quarter of 2009.

In an effort to expand beyond its core chip-making business, Intel said in August 2010 that it had agreed to buy McAfee, the computer antivirus software maker, for about $7.7 billion in cash. With its McAfee purchase, Intel is gaining an entrance into the security tech sector, one that is expected to continue growing quickly.

Intel is also pushing hard in the highly competitive race to put chips in smartphones and televisions and other consumer devices that are gaining computer power. In October 2010 it reported a flurry of sales of the company’s chips in TV and set-top boxes, figures that seemed to bode well for Intel’s consumer aspirations. The company sold one million chips aimed at smart TVs last quarter, and its only prominent loss was getting shut out of Apple TV.

Headquartered in Santa Clara, Calif., Intel was founded in 1968 by two giants of the early semiconductor industry, Gordon E. Moore and Robert N. Noyce, two of the founders of Fairchild Semiconductor. The company was initially financed with a $2.5 million investment arranged by a renowned Silicon Valley venture capital investor, Arthur Rock, who later helped finance Apple Computer.

Intel got its big break in 1981 when International Business Machines, then known for manufacturing mainframe computers and other office machinery, selected Intel to provide it with the processor for its first personal computer, the I.B.M. PC. Within a few years, Intel had become one of largest corporations in the United States and one of the most recognizable brands in the world.

In 2009, Intel was hit with an antitrust action by the European Union. Its first-quarter revenues for the year fell 26 percent to $7.1 billion and profit fell 55 percent.

In December 2009 the Federal Trade Commission sued Intel, accusing it of using its dominant market position "to stifle competition and strengthen its monopoly." The filing went beyond charges in cases brought by European regulators and the New York state attorney general in focusing on video graphics chips and software in addition to Intel's core market, the microprocessors that sit at the heart of personal computers.

The F.T.C. move also came a month after Intel reached a sweeping $1.25 billion settlement with its longtime rival in the chip market, Advanced Micro Devices. That settlement, covering both private antitrust and patent claims, was seen as possibly deterring the F.T.C. from moving ahead. In its long-running legal fight with Intel, A.M.D. was both the leading victim of the giant chip maker and its chief investigator, generating most of the evidence that was then used by government regulators around the world.

Intel has long been held up as the gold standard when it comes to ultra-efficient, advanced chip manufacturing plants. The company is the last mainstream chip maker to both design and build its own products, which go into the vast majority of the PCs and servers sold each year.

But with mobile technology, an expensive race is on to build smaller chips that consume less power, run faster and cost less than products made at older factories.

Intel has unsuccessfully tried to carve out a prominent stake in the market for chips used in smaller computing devices like smartphones. But the company says one of its newer chips, Atom, will solve this riddle and help it compete against the likes of Texas Instruments and Qualcomm.

In the last few years, Intel's investment in Linux, the main rival to Windows, has increased. Intel has worked on developing a Linux-based operating system called Moblin as well. The company has aimed the software at netbooks and smartphones in a bid to spur demand for the Atom mobile device chip.

To make Atom a success, Intel plans to use software for leverage. Its needs Moblin because most of the cellphone software available today runs on chips whose architecture differ from Atom's. To make Atom worthwhile for phone makers, there must be a supply of good software that runs on it.

The company's push into selling chips that are embedded in things other than computers -- televisions as well as phones -- has brought with it an unfamiliar atmosphere of anonymity, as it foregoes the "Intel Inside'' stickers it worked so hard to make ubiquitous on laptop's and desktops.

Intel continues to face investor doubts about its long-term prospects. Executives at Intel have maintained that the PC industry has plenty of life left as a growth market, especially as developing countries begin buying large quantities of computers. Investors, however, have yet to buy into this vision.