This research develops a financial and competitive analysis of Intel Corporation. An objective of this research is to develop information that will permit an assessment of the appropriateness of the market price of Intel common stock.
Intel Corporation, founded in 1968, is the world's market leader in the manufacture of microprocessors. The company's microprocessors·including the x86, MMX, and Pentium family·have been providing the brains for IBM-compatible personal computers since 1981. The company also makes computer micro-controllers, random access memory (RAM) cards, networking products (such as EtherExpress adapters, FastEthernet cards and servers), and conferencing equipment (such as the ProShareVideo System). Intel continues to expand and upgrade its products and facilities to maintain its dominance over rival chip makers such as Cyrix and Advanced Micro Devices·AMD (Intel Corporation, 1997).
Intel's fiscal 1996 sales exceeded $20.8 billion. The company's sales in 1996 represented a gain over 1995 sales levels of 28.7 percent, following an increase of 41 percent from 1994 to 1995. Intel employs approximately 45,000 people (Intel Corporation, 1997). Intel posted record net revenues in 1996, for the tenth consecutive year. Higher volumes of the rapidly growing Pentium microprocessor family, partially offset by lower processor prices and decreased revenues from sales of related board-level products, were responsible for most of the growth in revenues from 1995 to 1996. The Pentium Pro microprocessor family, introduced in late 1995, also contributed to the growth in revenues from 1995 to 1996. The growth in revenues from 1994 to 1995 was driven primarily by higher volumes of the Pentium processor family and related board-level products, which surpassed sales of the Intel486 microprocessor family in the third quarter of 1995. Revenues from the Intel486 microprocessor family declined substantially in 1995 and 1996,...