Course name and number
The Intel corporation was founded over 40 years ago in 1968 thus celebrated its 40 years anniversary in 2008. Having had a rough year 2012, I believe that currently it’s one of the best places to have your money. Robert Noyce and Gordon Moore were the scientists behind its foundation. The two introduced the world to a revolution of semiconductor memory produced which later lead to the introduction of the first in the world; the microprocessor that they produced in 1971. This was their entry into high-level innovative products which has left the company’s products amongst the most highly sought products in the world. Their level of innovation has helped the company develop a heritage in the computing world (Intel).
The company is well known to sell its products to equipment manufacturers and designers who incorporate their products in whatever they are producing and designing leading to increased sales as opposed to retail marketing. For example, it may produce microprocessors and sells them to other computer manufacturers and designers who then produce computers with the Intel products in them. The company has since its inception undergone a series of changes including the products it is now offering. Some of the products currently on its line include; applications, personal computers, automated factory systems, phones and tablets, data centers, automobiles and medical devices. In its development strategies, the company has been able to acquire Aepona Limited as well as ProFUSION-Comercio e Prestacao de Servicos em Tecnologia da Informacao Limited (Reuters).
Intel which now mainly operates from Taiwan, United States and China has its headquarters in Santa Clara, California. According to a publication by Research and Markets, the company now is said to employ over 79,000 employees all from different parts of the world where its offices are located (Research and Markets, 2009).
Strengths and weakness of the company
According to the founder of SWOT analysis, Albert Humphrey when he was the leader of the Stanford Research Institute back in the 1960s, the strengths of an organization refers to the characteristics of a business that gives it advantage over the others (Albert, 2005). This means that strength is only enjoyed by one firm relative to their competitors. While Intel may have many competitors, it has remained on top of its business for a long time now.
Key among its major strengths includes is well known and established brand. The brand Intel is recognized throughout the world. In fact, few of their consumers know of the existence of their competitors especially in their microprocessors industry. Their common branding of machines that have their now very famous tag line “Intel Inside” has made it become a big success in its ventures. This has also helped their smartphone line of business enjoy the benefits given that the customers expect so much of their already successful brands. Their brand image is also very strong given their well-established products (SWOT Analysis Examples).
Its other major strength is the advanced technology it is always applying. This makes it become the first one to introduce many different products that it has. For example, in 1971 it was the first to bring into existence the application of a microprocessor chip. This made it well known with the microprocessor chips that many people still think that they are the only manufacturers. The company also ensures that there is continued developments and advancement of the technology they are using. They are therefore always ahead of the game at all time being ahead of the producers (You Sigma).
The company also enjoys a large share of the market in which they operate. It is able to have most of their products being sold to major designers and manufacturers at their manufacturing stage. This means therefore that the company controls a major portion of the market by being able to sell to those people who control their market. They therefore, have to deal less with the retail markets directly but rather with the manufacturers. Their competitors who include AMD are known only by the high technology enthusiast. The common customer in fact, thinks that there are processors chips from Intel only
The company’s investment in research and development has also been instrumental to its continued development. They are able to come with new products thus being able to keep their market alive.
Every business is also faced with weaknesses when it’s being run. These refer to the various challenges that a specific business face while it’s being run. It is normal for any business to experience problems in the course of its activities. How one deal with these activities is what determines how successful an individual business will be relative to the other.
The company has been able to focus well on their chipset market while performing not so well in the mobile market. This means that the organization is not able to meet its manufacturing needs for the mobile products that they produce. This therefore, means that they are not able to meet all the possible sales that they can. It also means that if the processors failed, the company would suffer a major setback on its activities as it highly depends on the chip functionality.
The company’s concentration on their customer is also very wanting. It could be partly because they have not had a history of dealing directly with the customers or because they just do not have major concentration on the same. There is therefore, need to change as in the current world the consumers are more informed and highly responsive to the quality of services that they receive. Failure to change the attitude that the organization has towards its employee may mean a loss to the company in how it carries out its business.
Pro forma Income statement Annual Income Statement (values in 000’s)
Period Ending: Pro Forma 12/29/2012 12/31/2011
Total Revenue $58,675,100 $53,341,000 $53,999,000
Cost of Revenue $22,209,000 $20,190,000 $20,242,000
Gross Profit $36,466,000 $33,151,000 $33,757,000
Research and Development $10,148,000 $10,148,000 $8,350,000
Sales, General and Admin. $8,057,000 $8,057,000 $7,670,000
Non-Recurring Items $0 $0 $0
Other Operating Items $308,000 $308,000 $260,000
$17,953,000 $14,638,000 $17,477,000
Add’l income/expense items $0 $0 $0
Earnings Before Interest and Tax $17,953,000 $14,873,000 $17,781,000
Interest Expense $0 $0 $0
Earnings Before Tax $17,953,000 $14,873,000 $17,781,000
Income Tax $4,847,000 $3,868,000 $4,839,000
Minority Interest $0 $0 $0
Equity Earnings/Loss Unconsolidated Subsidiary $141,000 $141,000 $112,000
Net Income-Cont. Operations $13,106,000 $11,146,000 $13,054,000
Net Income $12,965,000 $11,005,000 $12,942,000
Net Income Applicable to Common Shareholders $12,965,000 $11,005,000 $12,942,000
Pro forma Balance sheet/ Statement of financial position Annual Income Statement (values in 000’s)
Period Ending: Pro forma 12/29/2012 12/31/2011
Cash and Cash Equivalents $8,478,000 $8,478,000 $5,065,000
Short-Term Investments $9,684,000 $9,684,000 $9,772,000
Net Receivables $5,950,000 $5,950,000 $5,350,000
Inventory $4,734,000 $4,734,000 $4,096,000
Other Current Assets $2,512,000 $2,512,000 $1,589,000
Total Current Assets $31,358,000 $31,358,000 $25,872,000
Long-Term Investments $4,917,000 $4,917,000 $1,451,000
Fixed Assets $27,983,000 $27,983,000 $23,627,000
Goodwill $9,710,000 $9,710,000 $9,254,000
Intangible Assets $6,235,000 $6,235,000 $6,267,000
Other Assets $4,148,000 $4,148,000 $4,648,000
Deferred Asset Charges $0 $0 $0
Total Assets $84,351,000 $84,351,000 $71,119,000
Accounts Payable $10,654,000 $10,654,000 $9,852,000
Short-Term Debt / Current Portion of Long-Term Debt $312,000 $312,000 $247,000
Other Current Liabilities $1,932,000 $1,932,000 $1,929,000
Total Current Liabilities $12,898,000 $12,898,000 $12,028,000
Long-Term Debt $13,136,000 $13,136,000 $7,084,000
Other Liabilities $3,702,000 $3,702,000 $3,479,000
Deferred Liability Charges $3,412,000 $3,412,000 $2,617,000
Misc. Stocks $0 $0 $0
Minority Interest $0 $0 $0
Total Liabilities $33,148,000 $33,148,000 $25,208,000
Stock Holders Equity
Common Stocks $19,464,000 $19,464,000 $17,036,000
Capital Surplus $0 $0 $0
Retained Earnings $35,351,000 $32,138,000 $29,656,000
Treasury Stock $0 $0 $0
Other Equity ($399,000) ($399,000) ($781,000)
Total Equity $51,203,000 $51,203,000 $45,911,000
Total Liabilities & Equity $86,554,000 $84,351,000 $71,119,000
Profitability Ratios 12/29/2012
ROA % (Net) 14.2
ROE % (Net) 22.73
ROI % (Operating) 24.9
EBITDA Margin % 41.96
Calculated Tax Rate % 25.87
Revenue per Employee 509,405
Liquidity Ratios 12/29/2012
Quick Ratio 1.71
Current Ratio 2.43
Net Current Assets % TA 21.88
Debt Management 12/29/2012
LT Debt to Equity 0.26
Total Debt to Equity 0.26
Asset Management 12/29/2012
Total Asset Turnover 0.69
Receivables Turnover 14.3
Inventory Turnover 4.57
Accounts Payable Turnover 17.89
Accrued Expenses Turnover 7.36
Property Plant & Equip Turnover 2.07
Cash & Equivalents Turnover 7.9
Market value/EPS 12/29/2012
Cash Flow per Share 3.79
Book Value per Share 10.36
Financial statement review
The financial statements are one of the ways that the performance of an organization can be done. In fact most of the observers of business view it as the only way through which they can evaluate the performance of a business although it is not the only way. The main reason for this emphasis is the fact that most of the observers of businesses are more concerned with their financial performance than they are with other measurement. The fact that most of the interested parties has some financial obligation towards the corporations make it necessary that firms make their financial reports at the end of their financial periods. Intel Corporation is not an exception to this. It has to provide it financial records to the public who are interested parties to determine its financial performance.
A look at its financial records will shows a drop in the net income that is directly attributable to the shareholders down to$11,005,000,000 in the year 2012 from $12,942,000,000 in the year 2011. This is one of the figures that a major party to the running of the business are mostly interested in. such a drop as was evident in the resultant drop in the value of the EPS to 3.79 in 2012 down from 3.92 in the year 2011. Such a drop leads to the value of the firm especially when the value of the firm is determined by determining the value of a share. When the earnings attributable to a share reduce, it means that the overall value of the share reduces thus resulting to a drop in the total value of the firm. It is this reason that many firms struggle to have this figure increase each time. Achieving this is however not easy.
The company also had its sales reduce from the year 2011 to the year 2012. Though the difference is not much, it could be the reason why the resultant profit reduced in the end of the year. Intel should instead try and have incremental sales figures. Such a drop could be attributable to market share loss as it is expected that they could have sold less to their customer. The difference is also similar in their cost of revenue which also reduced in an almost similar margin for the two years. The reduction in sales revenues could be accepted had the firm reported more difference in the reduction in the cost of goods. This would have meant that the revenue reduced while the cost of the revenue reduced more. This however is not the case meaning there are no cost saving measures that were employed in the year.
The expenses for the year were all reported to have increased in the year 2012. This further reduced the expected profit margin that was already being affected by the low sales revenues. Intel should instead have come up with ways to reduce the expenses given that year 2012 was not performing well. The research and development, sales, general and admin, non-recurring items and the other operating items all increased in cost while they were expected to lower instead.
A closer look at the company’s asset, the balance sheet shows a considerable increase in the value of the current asset. This is the same with the total value of the total asset representing about twenty percent increase in the value of the asset. Such an increase is remarkable for a year when the total revenues reduced. However there is an almost similar increase in the value of the total liability to a similar percentage. This percentage however represent an almost half the value of the increase in the liabilities as compared to the increase in the assets.
The increase in the assets could also be explained with the resultant increase in the value of the common stock especially if there was no revaluation of the stock but rather issue of more stock. This increase in the value of the common stock could also explain the reduction in the EPS meaning that that there are more shares issued thus the pool of the common stock increased resulting to a reduction in what each of that common stock earns.
A look at the general ratios shows that the company is in a healthy financial position. In fact all the liquidity ratios grew for the better in the year 2012. This shows that irrespective of the reduction in profits, the firm is still liquid and running.
From the above analysis, it is evident that that year 2012 was one of the not so good years for Intel Corporation. It is one of those years that a company has its cycle go down. It is thus one of the best times that one can invest in since it’s more likely that the company will bounce back this year. With its shares trading at $23.185 and its EPS having had a drop of 3.64%, I think it’s the best time to invest in currently.
Albert, H. (2005). SWOT Analysis for Management Consulting. SRI International.
Intel. (n.d.). Historic Timeline. Retrieved July 9, 2013, from Intel: http://www.intel.com/content/www/us/en/history/historic-timeline.html
Research and Markets. (2009). Intel Corporation – SWOT Analysis. Retrieved July 9, 2013, from ResearchandMarkets: http://www.researchandmarkets.com/reports/542220/intel_corporation_swot_analysis
Reuters. (n.d.). Profile: Intel Corp (INTC.O). Retrieved July 9, 2013, from http://www.reuters.com/finance/stocks/companyProfile?symbol=INTC.O
SWOT Analysis Examples. (n.d.). SWOT Analysis For Intel Corporation. Retrieved 2013, from SWOT Analysis Examples: http://www.swotanalysisexample.org/swot-analysis-for-intel-corporation.html
You Sigma. (n.d.). Intel (SWOT Analysis). Retrieved July 09, 2013, from You Sigma: http://yousigma.com/comparativeanalysis/intel.html