Intel’s Capital Budgeting Decision in 2013 Essay

An arguable capital budgeting close in Intels financial Plan 2013 Thursday 17 January 2013, Thomson Reuters, the worlds largest international multimedia youthfuls agency, has highlighted several(prenominal) concerns virtually Intels Financial Plan 2013. Noel Randewich, the reports writer, thought Intel Corporations current-quarter revenue augur disappointed Wall Street analysts. The agent behind is Intel will spend more $2 meg of its increased spending on expanding researching facility. This action is a controversial one because it has feedbacks from different sides. Essentially, one major worry is probably that the predicted personal reckoner grocery size is going to be smaller in 2013 while Intel lays a bet on very huge investment. However, Chief Executive Paul Otellini express that modern long-term assets could help Intel maintain the lowest cost as possible. On the some other hand, some other Wall street analysts advocate Intels decision due to fact 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 dress hat known for producing the microprocessors found in many personal computers. The company also makes a range of other hardware including network cards, motherboards, and graphics chips. Yet Intel became reputed after Wintel alliance with Microsoft Corporation, which enabled Intel to possess 80% of personal computer 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 important decision because Intel has to face a great way out of effects. The first clear limitation could be that Intel would run the operation under its capacity due to refreshed space of new plant as well as to the reduced market size. At the equivalent time, a nonher stumbling block might be that its higher fixed cost than previous years unimpeachably harms the comp anys bottom line. Intel estimated first-quarter revenue of $12.7 billion, plus or minus $500 million whereas analysts expect $12.91 billion for the current quarter.Wall Street analysts assumed that Intel has been making a risk bet for 2013 and Intel should not expand its business while the PC chip market is not growing much. It is very level-headed for those analysts to think like that because Intel now has a absolutely strong competition with other competitors for the new market segment of mobile phone chip making. It has recently entered this market territory in 2012 and its market fortune for smart phones is less than 1 percent, trailing Qualcomm, Samsung Electronics, ARM and others. Therefore 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 cost lowest on a per unit ground owing to the leadi ng edge capacity. Besides this, a second plus point could be Intel has vigilant a plan to raise the market serving in the whole industry with a new facility of researching future manufacturing technology. It seems to be a sign of innovations, new products, new market share and of scarper higher returns in 2013.In conclusion, this Intels capital budgeting decision is surely a bet besides times and the companys efforts itself will answer us how it can uphold the leading incline 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, send away Income of $11.0 Billion. Newsroom.intel.com, 17 Jan 2013. Web. 18 Jan 2013.Discussion Questions1. Are there any different p ros 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 boundary line after a huge investment in 2013 first quarter?