Intel's Difficult Year And What's Ahead 1

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 reported its full year 2012 earnings on January 17 with 1.2% and 15% declines in annual revenue and net income, respectively. However, Intel generated approximately $18.9 billion in cash from its operations highlighting that it is managing its operations well amid macro weakness.onda v972 quad core
At $13.5 billion, the Q4 2012 earnings were in-line with Intel's expectation. While revenue declined marginally on a y-o-y basis, gross profit was 31% lower compared to Q4 2011. Though Intel's data center group witnessed strong sequential and annual growth, a continuous decline in revenue from the PC client growth combined with increasing investment in building its technology prowess has impacted Intel's bottom-line.

Nevertheless, 2012 has been an eventful year for Intel as the company made significant progress in alternate markets with new product launches and design wins. For 2013, it has a robust pipeline of new platforms and products, which we feel will help increase Intel's competitiveness in the market. While Intel's short-term growth might suffer from the PC slowdown and a small footprint in the mobile computing market, we believe the company has strong fundamentals to support a higher valuation.After a tepid response for ultrabooks in 2011, due to their steep price, Intel introduced a $300 million fund to achieve improvements in the same. (quad core tablet 10.1)Last year, it launched its largest advertising campaign in a decade to increase the adoption of Intel powered ultrabooks. Intel claims that the growth in ultrabooks has helped the company achieve its volume goals in the first half of 2012. Intel ramped up its ultrabook designs from 20 to 140+ in the last one year. Additionally, ultrabook prices have come down since then to as low as $699, and Intel intends to further reduce the price to $599 by the year end.
However, despite Intel's efforts, Ultrabooks are estimated to account for less than 0.5% of worldwide notebook PC shipments in 2012.

In the coming months, Intel plans to introduce more than 140 core-based Ultrabooks, more than 40 of which will be touch-enabled. Aiming to combine the productivity of a PC with the convenience of a tablet, Intel intends to launch a dozen convertible Ultrabook designs. As the line between PCs(quad core tablet pc) and tablets is blurring, Intel intends to focus on developing mo re convertibles and detachable ultrabook designs in the future.
At the recently concluded CES 2013, Intel announced a low power 7-watt version of Ivy Bridge line of processors for ultrabooks. The low power line of processors will enable OEMs to have greater flexibility in designing thinner and lighter touch based ultrabook convertibles. In addition, it will also introduce its 4th generation core processor family, code-named Haswell, later this year. The processor promises to offer up to 13 hours of battery life, in turn enabling a broad new range of ultrabook convertibles, detachables and tablets.

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