Investopedia: Waiting For Intel To Get Its Due

These are hard times to be an "old tech" company. Chip giant Intel (Nasdaq:INTC) is not the only star of the '80s and '90s struggling to recapture a little analyst and investor love, as Microsoft (Nasdaq:MSFT) and Cisco (Nasdaq:CSCO) can both attest, but investors may want to dig deeper and see whether there is more here than the current valuation assumes. While it is true that Intel faces some direct challenges to its silicon empire, the company is not as hopelessly behind the times as some believe.

A Solid End to the Year
Of course, Intel's value as a stock is something of a relative value call - this company is not going to be a torrid grower again anytime soon. To that end, fourth quarter revenue growth of 3% (sequential) and 8% (year-on-year) was better than the average analyst's guess, but not up to a level that will thrill growth investors. Still, PC-related revenue growth was better than 3%, while data center revenue jumped 24%. (For, see The Eternal Struggle: Growth Vs. Value.)

The company also did well by its investors on profitability. Gross margin improved almost 300 basis points from the year-ago level, while operating income jumped significantly. This improvement in operating income was certainly helped by the data center business, where segment income rose 47% and operating margin is more than 10% better than in the PC business. (For more, see Zooming In On Operating Income.)


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