Intel's Cheap But Faces Herculean Headwinds With PC Slowdown
Quick Take On account of weakness in the global PC market, Intel posted a 1.2% and 15% decline in its 2012 annual revenue and net income, respectively. It will announce its Q1 2013 earnings on April 16, and due to the persistent decline in global PC shipments and a small footprint in the mobile computing market, we do not foresee any significant improvement in earnings. PC sales declined marginally in 2012, and research firm IDC estimates the downward trend to continue in 2013 as well. Intel derives >60% of its revenue from the PC client group. A overhaul in Ultrabooks – new designs and lower prices - will enable Intel to retain its dominance in the PC microprocessor market despite the expected entry of ARM-based players this year. Though it accounts for less than 1% of the global market share in smartphone chips, Intel has made good progress in mobile computing in the last year While we do not expect the extended mobile portfolio to make a significant contribution to Intel’s Q1 2013 revenues, we forecast higher revenue proportion from the mobile products in the future. Dominating the PC microprocessor market for the last two decades, Intel's growth has slowed down recently on account of weakness in the global PC market. The company closed its fiscal 2012 with 1.2% and 15% declines in annual revenue and net income respectively. However, it generated approximately $18.9 billion in cash from its operations, highlighting that it is managing its business well amid macro weakness.