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The share price of Intel (NASDAQ:INTC) rose steadily this morning, then spiked upward as the news reported by the board of directors at the company’s annual shareholder’s meeting became public.
Opening this morning at 34.15, shares gained to 4.66% to close the day at 35.95, the highest the Intel share price has closed since February 2001.
Two tidbits essentially prompted the uptick in Intel’s stock. The first was the news that the board had approved a $0.06 increase in the annual dividend per share to $0.96, effective with the first quarterly dividend in 2015. Chairman Andy Bryant introduced the other item by saying that, “Today’s dividend announcement reflects the board’s confidence in Intel’s strategy.”
In other words, the board believes that Intel’s strategy is not only right, but also that it is working. It is now expect mid-single digit growth for 2015. That strategy is, “to utilize the core assets that drive the company’s PC and data center businesses to move into profitable, complementary market segments. Intel’s leading-edge manufacturing capability, Intel architecture, and the use of shared IP are key elements of the growth strategy,” according to CEO Brian Krzanich.
CFO Stacy Smith added that, “2014 is turning out to be a better year than we thought. After two years of decline, we’re growing again. We’re not yet where we need to be, but we’re making progress.”
While Intel is fighting stiff competition in the PC and laptop market and competes poorly in the realm of smartphones, it dominates 98% of the corporate server market. Maintaining a firm grip on that most profitable segment of its business will continue to be Intel’s primary strategy.
Intel has regained some traction in what is, some say, a decline PC market. However, in order to wrestle business away from other chip makers who use designs created by ARM Holdings (LSE:ARM), it has been offering subsidies to some customers. That has resulted in customer retention, but it has also put a strain on the company’s overall profitability.
To that point, Bryant said, “I’m not going to tell you I’m proud of losing the kind of money we’re losing. But I’m also going to tell you I’m not embarrassed by it like I was a year ago about where we were. This is the price you pay for sitting on the sidelines for a number of years, and then fighting your way back into a market.”
The company expects a significant breakthrough in the mobile market in 2015 as it begins to introduce SoFIA smartphone chips and RealSense 3D-camera technology. SoFIA integrates the 3G modem and the processor on a single, while other features, such as Bluetooth and Wi-Fi, would not be. Smartphone manufacturers will, therefore, be able to choose which features to include or exclude to offer a variety of options.
The RealSense™ technology “enables devices to reproduce depth in photos and videos just as we perceive it with our own eyes.”
The world of technology just keeps on getting more intense and competitive. Intel plans to play a leading role for a very long time to come.
