Keep Calm: Intel Corporation Already Paid That EU Fine

Shares of Intel  (NASDAQ: INTC  ) are lagging in early afternoon while chipmaking peers such as Qualcomm and Advanced Micro Devices (NYSE: AMD  ) post decent gains. While trying to read the collective mind of the market can often be an exercise in guesswork and futility, the likely reason for this underperformance is a European court's upholding of the $1.4 billion fine that Intel had to pay for anti-competitive practices (aimed at locking out AMD) back in 2009.

Relax, Intel already paid the fine
Many in the investment community cited this development as a potential negative catalyst for Intel. However, Intel paid the fine long ago and was simply appealing the European Commission decision. That $1.4 billion -- which represents about 14% of the company's trailing 12-month net income -- has already gone poof. At worst, Intel wasn't going to get its money back, and at best the company would have added about $0.28 per share back to its balance sheet

What now?
At this point, it seems clear Intel isn't going to get its money back. However, in the grand scheme of things, it's just not a big deal. Furthermore, while back in the days when AMD was competitive the anti-competition claim could have had a leg to stand on, today this is a nonissue. Any market dominance today on Intel's' part in PCs can be chalked up to superior products and a better-funded marketing department. 

Some may argue that such practices crippled AMD and led to the competitive situation seen today. However, if you think about it, AMD decimated its own ability to compete when it took on massive amounts of debt to buy graphics-card maker ATI Technologies for a staggering $5.4 billion in 2006 (AMD later took a writedown on that acquisition).

This crippling debt put the company's financial position in the dumps, requiring AMD to sell off manufacturing plants that it could no longer afford. At the same time, AMD couldn't keep up with the research and development spending needed to stay competitive with Intel. When AMD's products were competitive, it couldn't make them fast enough to satisfy demand. Go figure.

Foolish takeaway
While many will make a mountain out of this proverbial molehill, the reality is that this court decision has no material impact on Intel's financials today or going forward. The damage was done when Intel paid the fine in 2009, and there's no reason to believe that this (or anything related to this) will impact the company's financials or stock price on a long-term basis.

In other words, keep calm. 

Leaked: Apple's next smart device (warning, it may shock you)
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Read/Post Comments (5) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 12, 2014, at 5:56 PM, mtechac wrote:

    Again, blowing away the huge Intel marketing smoke, Intel just sells laptops with its own products and needs NVIDIA and/or AMD for high-end GPUs. Intel failed creating a high-end GPU with the failed project Larrabbee, which was a miserable failure that showed that Intel cannot build high-end GPUs..

    I will not touch Intel stock now that APPLE, Samsung, AMD, Qualcom, TI, and practically everybody are going to be selling 64 bit ARM devices, servers, laptops, workstations, etc.

    Nope.. I will not touch Intel stock knowing that it has fast but expensive prehistoric CPUs and is about to get clobbered beginning this year with the 64-bit ARM tsunami..

  • Report this Comment On June 12, 2014, at 5:56 PM, mtechac wrote:

    Again, blowing away the huge Intel marketing smoke, Intel just sells laptops with its own products and needs NVIDIA and/or AMD for high-end GPUs. Intel failed creating a high-end GPU with the failed project Larrabbee, which was a miserable failure that showed that Intel cannot build high-end GPUs..

    I will not touch Intel stock now that APPLE, Samsung, AMD, Qualcom, TI, and practically everybody are going to be selling 64 bit ARM devices, servers, laptops, workstations, etc.

    Nope.. I will not touch Intel stock knowing that it has fast but expensive prehistoric CPUs and is about to get clobbered beginning this year with the 64-bit ARM tsunami..

  • Report this Comment On June 12, 2014, at 5:57 PM, mtechac wrote:

    Wow.. someone is living in mars..!!!

    Intel is really a laptop company with the best CPUs. Intel does not have high end GPUs, and high end GPU IP, so it will never compete with AMD in that area.

    For building a high-end workstation or a high-end gaming system, the Intel hardware has to be accompanied by NVIDIAS or AMDs high-end GPUs.. period...

    AMD bought ATI in order to get the high-end IP on GPUs and gaming environment.. Crossfire, etc.

    Now that AMD has been able to fuse the CPU and GPUs, with their HSA/hUMA APUs, Intel will begin to lose its market share because Intel only sells high end GPUs. Their laptop GPUs are very weak and expensive and are bad for long term profits.

    Knowing that Intel is at its all time high in 10 years and knowing that its 64-bit x86 market high-profit share is going to begin to crumble now that ARM (APPLE, Samsung, AMD, Qualcom, TI, etc) are releasing their 64 bit chips, Intel is about to lose its profits and no Intel marketing smoke is going to prevent that..

    Again, blowing away the huge Intel marketing smoke, Intel just sells laptops with its own products and needs NVIDIA and/or AMD for high-end GPUs. Intel failed creating a high-end GPU with the failed project Larrabbee, which was a miserable failure that showed that Intel cannot build high-end GPUs..

    I will not touch Intel stock now that APPLE, Samsung, AMD, Qualcom, TI, and practically everybody are going to be selling 64 bit ARM devices, servers, laptops, workstations, etc.

    Nope.. I will not touch Intel stock knowing that it has fast but expensive prehistoric CPUs and is about to get clobbered beginning this year with the 64-bit ARM tsunami..

  • Report this Comment On June 13, 2014, at 11:46 AM, jpanspac wrote:

    Ashraf, I wish you had written this article a month ago. It might have helped to shut up some of the AMD trolls. But then again, probably not.

  • Report this Comment On June 13, 2014, at 12:00 PM, ToxyFool wrote:

    And the Pumper keeps pumping. You know as well as I do that Intel would LOVE to be able to offer the integrated GPU performance that AMD does. But yet, with 10X the manpower and financial resources, they consistently fail to do so. That is how much Intel sucks.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2992269, ~/Articles/ArticleHandler.aspx, 9/2/2014 1:21:59 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Apple's next smart device (warning, it may shock you

Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Advertisement