The recent negative headlines surrounding the death of traditional PC business have impacted Intel (INTC). In fact, it has also overshadowed the company’s tremendous growth over the past years. Over the last 5 years, it has grown its revenues by 8% a year. This seems relatively good considering its size and scale. The strong performance is attributed to the company’s strong competitive advantage in the processor business. With the proliferation of personal computing, the company was able to capture its growth fully.
On a trailing 12 months basis, it has increased by 17% compared to the same period last year. This translates to a net profit growth of 19% for the same period. The company appears to be doing well, despite the concerns that the emergence of smartphones and tablets will put a drag on the company’s growth. Its nearest rival, ARM Holdings (ARMH) have taken a niche on the processors of these devices. While the market believes that this is much a threat to Intel, I believe this phenomenon will provide Intel new opportunities for growth.
The Source of Intel’s Competitive Advantage
Intel investors know that the source of the company’s competitive advantage is attributed to its massive scale and resources. This gives the company a significant research and development advantage. It can easily invest in a certain technology that will get them at the forefront of innovation. With the most advanced manufacturing processes in the industry, it can create processors that are faster and have lower cost per unit relative to its close competitors.To continue reading, click here.