Research costs are key to their success

Article Excerpt

These four technology companies continue to invest heavily in research. While that spending depresses their current earnings, it also helps them develop profitable new products to spur earnings for years to come. INTEL CORP. $51 (Nasdaq symbol INTC; Conservative Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 4.5 billion; Market cap: $229.5 billion; Price-to-sales ratio: 3.3; Dividend yield: 2.5%; TSINetwork Rating: Above Average; www.intel.com) is the world’s leading maker of computer chips: its products power 80% of all personal computers. In the quarter ended December 29, 2018, Intel’s revenue rose 9.4%, to $18.66 billion from $17.05 billion a year earlier. If you exclude unusual items, earnings rose 13.9%, to $5.9 billion from $5.2 billion. With fewer shares outstanding, per-share earnings rose 18.5%, to $1.28 from $1.08. Demand for chips that power datacentres slowed in the latest quarter after several months of rapid growth. As well, U.S. tariffs have hurt Intel’s sales in China. However, the company’s new chips, which are much faster than current models,…