Intel Corp. is a company that is always in mind of the technological field being the leader in the semiconductor world. Intel was founded on July 18th, 1968 as Integrated Electronics Corporation based in Santa Clara, California. The original founders of Intel were actually former Fairchild employees. Gordon E. Moore (famously known for Moore's Law) and Robert Noyce inventor of the semiconductor were the entrepreneurs of Intel. The original creation of Intel was to produce SRAM and SDRAM, but later focused on microprocessors. However RAM and microprocessors are not the only products Intel produces, Intel has expanded to any integrated circuit or electronic device that can be thought of. Although out of all devices produced, they are best known for their microprocessors.
The creation of Intel is a string of many great achievements to mankind. IBM produced the "personal computer" also known as the PC. If it were not for Intel IBM would not have components to build the PC. Intel in 1971 was the first and only microcomputer. With time and according to Moore's law, this states that, with every year technology doubles. Due to Moore's law our technology has grown exponentially and it has proven itself many a times. Thanks to Intel we have components necessary to have a computer, to have use of the internet, to have laptops, and many other devices! There are even some products that you would not even think would be related to Intel like its association with the military and helping our troops with simulations and some of its technology.
So far Intel has not been affected by the current economic situation. However in the early year of 2000 Intel faced a slowing of demand for the high-end microprocessors. Intel has 1 competitor called AMD which was dominating across the board of low-mid-high end processors. In 2005 CEO Paul Otellini structured the company to focus more on its processor platforms at which hired over 20,000 new employees. In 2006 Intel started to lose profits which led to 10,500 employees being laid off.
Some of the most recent accomplishments of Intel would be the partnership with Apple in 2005. Other major accomplishments would be with the Intel Core2* series, Quad, and Tetra series (core2 means two processors in one chip, quad is four, while tetra is 6). With the Core2 series Intel grew exponentially and even made statements and gave public calendars on when its technologies would be released! Intel has many buildings in the U.S and outside. There are facilities from China, Costa Rica, Malaysia, Israel, Ireland, India, Russia, and Vietnam, Colorado, Massachusetts, Arizona, New Mexico, Oregon, Texas, Washington, and Utah. In Oregon as an example they employ over 15,000. Also a facility in Costa Rica was responsible in 2006 for 20% of Costa Rica's exports and 5% of the country's GDP.
The Manufacturing of Durable Goods:
In this portion we shall go over a couple of macroeconomic indicators that effect companies such as Intel. The first indicator I would like to get into is the Durable Goods indicator. The Durable Goods indicator explains the amount of new orders placed for domestic products that have a life expectancy of three or more years. Durable Goods can be many things such as Vehicles, Electronic goods, Furniture, and but not limited to Office equipment. All of these products are accounted for by the U.S Bureau of Census and the U.S Department of Commerce on a monthly basis. The companies that sell these products I.E like a Costco or Wal-Mart make an advanced estimate of what they believe their orders will consist of. After about two weeks of the the actual orders than official documentation is sent over. In my opinion I believe that this is all documented accurately, because if companies do not than they themselves will have issues with accounting and their own stock on the shelves. All of this information is gathered up by businesses and sent to the U.S Bureau of the Census and U.S Department of Commerce.
The information and documentation sent to them include, but not limited to: New orders, shipments, unfilled orders and inventories. The information sent to the U.S Bureau of Census will track how busy the company is and put all together with the other company's tells us the whole sector of the U.S will be not only presently, but in the future. What is shocking is the facts of how the U.S effects the world! According to the World Bank we, the U.S, produce about 24 percent of the world's total output!
To explain a little more about our economic indicator of Durable Goods I will be presenting a chart of how we can plainly see a crash in September of 2008 until about June of 2009. Within those dates the graph is showing us a complete collapse approximately a -30% in Durable Goods through this indicator. Although there was a collapse of the Durable Goods in September 2008, it has been slowly recovering. The graph was obtained from fidweek.econoday.com
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We will slightly move into and explain a little bit about the new orders for Durable Goods. From last year (April 2010) to this year (April 2011) showing how much of an increase in our Durable Goods has been. According to the Institute for Supply Management or also known as ISM there has been a slow of Durable Goods new orders from 65.7 to 61.7 giving that a -1.6% growth factor. Although the Backlog of Orders are not doing bad at all, having a 57.5 back in 2010 to 61.0 giving it a 8.5% increase. Currently the ISM is showing a slow for recent months. However there are three areas of manufacturing that have been suffering such as Supplier Deliveries, Production, and Customer Inventories. I believe all others will fluctuate such as Durable Goods orders and will bounce back up!
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Because of the trend displayed in this Indicator, I believe that there will be a steady rise of U.S manufacturing of Durable Goods. It comes to my conclusion that the economy has its ups and it's downs, but there has been significant evidence that the indicator is on a very slow rise. I believe that new orders will be made and will continue. I also believe that it will cause both production and employment to rise in this sector.
From what we have seen there should be a positive spillover effect throughout the retail and transportation sectors of our economy. Although there were rise of new orders for Durable Goods, this was due to the depletion of warehouse business inventories during the recession of 2009. As an example Intel in 2009 had to lay off 1800 workers and shut down multiple plants across the globe. In fact head chairman of Intel Otellini makes a statement of Intel's first loss in 21 years. However as sales continue to increase, there are demands to place new orders to restock warehouse inventories once again.
We as the people can only hope and wish for the best and stay optimistic of the inventories that are restocked. Even if we, the people, stay optimistic and have high hopes than we will need the help from our federal government. The federal government at times make the people hesitant, because of the choices they make in this fragile economy. Even with money and debt at the top of every American mind the fed introduces programs such as, but not limited to: National Healthcare Law, Cap and trade carbon taxes, higher individual and business taxes and to top it off we the people do not even believe that the recession is over or close to it. I would have to say that I love the economy class and the job Mr. Torres does in informing us in the horrible choices that the fed makes. I also like the feeling to know what we spend our money onto, or even just how the government is way out of control.
The U.S Durable Goods macroeconomic indicator also seems to correlate really well with Intel. Manufacturing of durable goods started to plummet at the beginning of the fourth quarter of 2008 just as Intel's micro processing division did. There was a calculation of a decrease in sales from Intel from 2008 that lasted through 2009 losing about 14.9% in revenue. Although there was a loss in 2008-2009, Intel was able to pull through in 2010 gaining a 24% rise in revenue from 35 billion to 43 billion. Those figures actually correlated with the national New Orders figure at which had shown growth!.
A fascinating fact about Intel was the ability to survive and adapt through the economic crisis. Although the recession had hit many companies across the board, Intel's resilience impressed me by maintaining their stock dividends. Intel in fact did something that seemed impossible and that was gaining money through it's stocks. Intel in 2008 had stocks at $12.43 during the recession, but made a steady climb back up and the stock is now at a steady $23.00 per share. It appears that the U.S Durable Goods macroeconomic variable does not have an effect on the quarterly dividends payments made by Intel. Thanks to our teacher, Mr. Torres, we even have an understanding of how important it is for corporations to pay dividends and why it is so important to our capitalist system. However the Federal government is planning on raising taxes on dividends from the current 15% and will treat it as regular income during 2011, which will not only increase the taxes for investors, but will also effect the elderly who depend on the dividends. I as a U.S citizen do not understand why the federal government and others are against our capitalist system. Because of our system, it has made America the largest and most powerful economy in the world! What other country has ever achieved what America has?
International Balance of Trade:
Import and export prices indicate the inflation rate of internationally traded products. Imports are goods or services that were produced abroad and imported to the United States. Exports are goods or services produced locally and sold abroad to other countries. These macroeconomic figures are produced and reported by both the U.S Department of Labor and also the Bureau of Labor Statistics also known as BLS. The reports are also published monthly for public view.
The International Balance of Trade figure takes the measurements of goods and services that are imported and exported to and from the United States and other countries. All of the amounts of imports and exports are reported monthly and prepared for public viewing, which plays a very significant role in the value of the U.S dollar. Depending on how our level or need of imports will show the demand of foreign products and will tell us the demand for goods that we produce domestically. The sources for these indicators are from the Bureau of Economic Analysis, the Bureau of the Census and the U.S Department of Commerce. What makes or affects the U.S dollar and how strong it is, is due to strong export market or a narrow trade deficit. These indications should go along with how corporations rise and earnings should correlate with the U.S stock market. However what can hurt the U.S dollar and cause the dollar to fail is large deficits, this would thus indicate that we are importing more than we are exporting. The United States needs to expand exports and the way to do that is: U.S product prices must be lower than foreign products, the overall value of the dollar being weaker versus foreign currencies, and foreign economies growing quickly needing American imports.
