The year is nearing its end, and now's a good opportunity to look at what happened throughout 2012 to the stocks you follow. If you know the important things that a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it really deserves a spot in your portfolio.
Today, I'll look at Intel (INTC +2.61%). As a member of the Dow Jones Industrials (^DJI 0.61%), the semiconductor giant has long been a leader in microprocessor technology. Yet as consumers shift away from PCs toward mobile devices, Intel hasn't gotten off to a strong start in making the transition. Read on to find more on what moved shares of Intel in 2012.
Stats on Intel
|
Year-to-date stock return |
(14%) |
|
Market cap |
$100 billion |
|
Total revenue, trailing 12 months |
$53.8 billion |
|
Net income, trailing 12 months |
$11.9 billion |
|
1-year revenue growth |
4.2% |
|
1-year earnings growth |
(6.8%) |
|
Dividend yield |
4.5% |
|
CAPS rating (out of 5) |
**** |
Source: S&P Capital IQ.
Why did Intel plunge this year?
For Intel and other companies that have historically relied on PCs for their financial strength, 2012 has been a year of passing the torch. Sagging PC demand hasn't just hit Intel; Microsoft (MSFT 0.25%) has also suffered from the weakness even as it tried to drum up support for its latest Windows 8 release. You can really see the damage in PC makers Hewlett-Packard (HPQ 0.24%) and Dell (DELL +0.00%), both of which are struggling to reinvent their business models as PC manufacturing has turned largely into a commoditized business.
Intel has certainly been trying to reinvigorate its business. New touchscreen Ultrabooks and chip lines for smartphones are coming soon and could help drive new demand. Perhaps more importantly for the long run, Intel is also making moves into data centers and cloud computing, with cloud-based revenue up 50% in its most recent quarter versus a year ago.
One unexpected challenge the company faces right now is finding new leadership. Last month, CEO Paul Otellini unexpectedly announced that he will retire next May, about two years before he would have reached Intel's mandatory retirement age of 65. With important decisions to be made concerning the company's future direction and business strategy, the last thing Intel needs right now is a power vacuum at the top.
Intel remains a huge player in the chip market, and even if PCs continue to decline, it'll take a long time for revenue in the space to dry up. What investors want to see, though, is a renewal of growth opportunities, and so far, they aren't convinced that Intel will deliver.
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