Intel: 3 Concerns Plus Another

Intel Corp. (INTC) has experienced very slow growth over the last four years. This was mainly due to Advanced Micro Devices, Inc. (AMD) emerging as a competitor in the microprocessor, motherboard and chipset markets.

Costs have continued to outpace revenue growth. Against the 12.1% revenue increase in the 2004-2007 period, COGS [cost of goods sold] increased 24.9%, while operating expenses (R&D and SG&A) increased 10.8%. This brought down the operating margin from 30.1% in 2004 to 25.6% in 2007. While 2008 could develop into a good year in terms of operating margins, we expect margins to decline again in 2009.

Although notebooks are growing strongly, the company is seeing increasing demand for the lower-end variety. This is mainly due to the increasing demand from several emerging economies.

It now appears as though you can add macro economic and inventory concerns to the mix, as the firm warned for the 2nd time this quarter that revenue would be falling to levels not seen since the June of 2006 quarter. ($8.2 billion).

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