Intel Is Making More Money Than You Thinkhttp://www.fool.com/investing/general/2013/12/21/intel-is-making-more-money-than-you-think.aspx Ashraf Eassa
December 21, 2013
Intel (NASDAQ: INTC) has seen stagnant revenues and declining profits over the last couple of years. This hasn't been well-received by investors -- the stock is stuck in a pretty narrow range while the NASDAQ hits record highs. But it's important to understand just why the company has seen year-over-year earnings declines. It's really not as bad as one would initially think.
The mobile investment is huge
Chips -- processors, modems, connectivity, and so on -- have a pretty long development cycle; developing a modern processor and surrounding CPU can take more than four years from initial concept to shipping silicon. So, the efforts that investors are seeing coming out today are really projects that started back in the 2009-2010 time frame, when Intel's budgets in the low-power space were relatively anemic.
The payoff is coming
Unfortunately for the actual profitability aspect of the situation, Intel is going to be aggressively pushing a high-end tablet platform into mid-range and low-end devices. This means that Intel needs to provide subsidies to offset the increased bill of materials that these high-end chips require. However, by the time 2014 is out, Intel will have rolled out new platforms to remedy the bill-of-materials disadvantage.
Until then, look at how much money Intel's other businesses make
This investment is necessary