For the second time in six months, Intel (INTC) raised its quarterly dividend. Starting in the third quarter, the company will pay 21 cents per share versus about 18 cents previously. This is a great move by management and underscores the confidence they have in its business and market position. Shareholders are the clear winners here and Intel’s management has once again shown that they get it in terms of how to manage the company’s large stash of cash.
PC Not Dead
CEO Paul Otellini is forecasting over 20% revenue growth over last year due to strong trends in the personal computer market despite concerns of its demise due to the exploding tablet PC craze from the likes of Apple (AAPL). Intel is extremely dominant in its industry, with only its little brother Advanced Micro Devices (AMD) always nipping at its heels, but never really posing a serious threat.
Intel seems to know itself as a company better than other technology giants. It knows that its days of torrid, explosive growth are behind it, and that more mature companies pay solid dividends and churn out consistent profits and cash flows annually. Contrast this with Microsoft (MSFT), which just overpaid for Skype in an attempt to keep up with the Joneses of techland.
Also, Cisco (CSCO) has fallen under some hard times as evidenced by its recent quarterly earnings report in which guidance missed the Street’s expectations. CEO John Chambers admitted that the company has lost its way and are trying to regain their step. That will be an uphill battle for the once half trillion dollar company.
Intel shares have at last started to show signs of life and currently trade near a 52-week high. Investors have to realize that mid-90′s are no longer and a different company exists today. That doesn’t mean it’s not a great one that can still make great returns for shareholders. This stock is worth a lot more than the $23 per share it is selling for today.
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