Intel Corporation (NASDAQ:INTC) offers a broad range of microprocessors and chipsets used in PCs, data centers, tablets, smartphones, automobiles, automated factory systems, and medical devices. The primary segment of the company’s business, the PC client- group segment, focuses on the production of chips for the PC market. In 2012, the segment generated $34.3 billion in revenue, accounting for 64.0% of overall company revenue. Revenue from this segment decreased 3.2% year-over-year from 2011 to 2012.
In 2012, the company created $53.3 billion in revenue, which is anticipated to grow to $56.9 billion by 2017. Presently, Intel carries a trailing-12 month profit margin of 19.4%, a metric which is projected to fall to 19.1% by 2015. The company pays out quarterly dividends of $0.22, which annualized puts the dividend as yielding 3.8%. In respect to valuation, Intel carries a price-to-earnings ratio of 11.8.
Now what?
Many of these companies either have a significant presence or are desperately attempting to build a presence in the tablet market. Apple Inc. (NASDAQ:AAPL) has its iPad, which, in terms of revenue generation, has grown 310.5% from 2010 to 2011 and 59.2% from 2011 to 2012. Microsoft recently launched its Microsoft Surface tablets, and tablets sporting the Windows 8 platform have been launched by Dell Inc. (NASDAQ:DELL) and Hewlett-Packard Company (NYSE:HPQ). Intel chips are regularly utilized in tablets, being integrated into all major tablets brands, with the exception of the iPad.
Just this year tablet shipments are expected to surge 68%, according to research firm Gartner. Some 201 million tablets are projected to ship this year, along with 276 million in 2014. Meanwhile, PCs are only expected to decrease in volume for years to come, as the graph below depicts.
The future growth of the industry will be in tablets, and investors will have to be aware of the companies capitalizing on the growth of tablets to make intelligent investment decisions in the world of technology.
The Foolish bottom line
The PC market can’t seem to get anything right, and is a market that is deteriorating, not growing. Several major companies are set to be affected by this shift in consumer preferences from PCs to tablets, and only those companies which strategically position themselves in the tablet market will benefit from the explosive growth projected for the industry. Likewise, only those investors who strategically position themselves in these companies will reap the potential upside that is presented.
The article Can the PC Market Get Anything Right? originally appeared on Fool.com and is written by Ryan Guenette.
Ryan Guenette owns shares of Apple. The Motley Fool recommends Apple and Intel. The Motley Fool owns shares of Apple, Intel, and Microsoft. Ryan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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