Intel’s Capital Budgeting Decision in 2013 Essay

An arguable capital budgeting ending in Intels Financial picture 2013 Thursday 17 January 2013, Thomson Reuters, the worlds largest internationalistic multimedia news agency, has highlighted some(prenominal) concerns about Intels Financial Plan 2013. Noel Randewich, the reports writer, thought Intel Corporations current-quarter revenue promise disappointed Wall lane analysts. The causation behind is Intel will glide by more $2 zillion of its increased spending on widening researching facility. This doing is a controversial one because it has feedbacks from different sides. Essentially, one major like is probably that the predicted personal computer marketplace size is going to be smaller in 2013 while Intel lays a compute on real huge investment. However, Chief Executive Paul Otellini said that modern long-run assets could help Intel maintain the lowest cost as possible. On the opposite hand, some other Wall street analysts advocate Intels decision ascribable to fac t that it would be a plus for company s operating efficiency.Intel was founded in 1968 with a vision for semiconductor memory products. It is shell known for producing the microprocessors found in many personal computers. The company similarly makes a range of other hardware including network cards, motherboards, and graphics chop offs. soon enough Intel became reputed after Wintel alliance with Microsoft Corporation, which enabled Intel to possess 80% of personal computer potato chip market.Back to the new event in the 2013 first quarter, the $2 billion investment on long-term assets belongs to capital budgeting decision type. Undoubtedly, it is very all important(p) decision because Intel has to face a great number of effects. The first suck up limitation could be that Intel would run the operation under its capacity due to unused space of new plant as well as to the reduced market size. At the same time, another stumbling block might be that its higher fixed cost than pre vious years definitely harms the companys bottom line. Intel estimated first-quarter revenue of $12.7 billion, plus or damaging $500 million whereas analysts expected $12.91 billion for the current quarter.Wall Street analysts assumed that Intel has been qualification a risk bet for 2013 and Intel should not expand its business while the PC chip market is not ontogenesis much. It is very reasonable for those analysts to think like that because Intel now has a dead strong competition with other competitors for the new market segment of winding phone chip making. It has recently entered this market territory in 2012 and its market share for smart phones is less than 1 percent, trailing Qualcomm, Samsung Electronics, ARM and others. and then the whole market size for Intel is not really large when compared to some previous years.However, Intels investment decision definitely holds positive aspects for the reason that the long-term implications of said decision is to keep the cos t lowest on a per unit basis owing to the leading edge capacity. excessively this, a second plus point could be Intel has prepared a plan to raise the market share in the whole patience with a new facility of researching future manufacturing technology. It seems to be a contract of innovations, new products, new market share and of course higher returns in 2013.In conclusion, this Intels capital budgeting decision is surely a bet but times and the companys efforts itself will answer us how it fundament uphold the leading position in chip making industry in 2013 and following years.Works CitedNoel Randewich, Liana B. Baker. Intel CEO to retire as chipmaker struggles with mobile. Reuters.com, 19 Nov 2012. Web. 18 Jan 2013.Noel Randewich. Intel weak outlook, spending hikes unnerve Wall Street. Reuters.com, 17 Jan 2013. Web. 18 Jan 2013.Patrick Darling. Intel Reports Full-Year Revenue of $53.3 Billion, Net Income of $11.0 Billion. Newsroom.intel.com, 17 Jan 2013. Web. 18 Jan 2013.D iscussion Questions1. ar there any different pros and cons for Intels capital budgeting decision apart from ones said in the analysis? 2. With this new investment, give the probability that Intel can raise its share more 1% in smart phones chip making market. 3. How can Intel stabilize the profit margin after a huge investment in 2013 first quarter?