Inside Intel: Fool by Numbers

On Tuesday, Oct. 16, computer chip giant Intel (Nasdaq: INTC  ) released third-quarter earnings for the period ended Sept. 29.

• The average selling prices for Intel's processors were flat from last quarter, at long last putting an end to a pricing slide. The company also shipped products out in record unit volumes, increasing total revenues significantly for the microprocessor segment.
• The gross margin improvement bears out the same story, along with lower manufacturing costs. The margins also show Intel's newfound willingness to walk away from low-margin deals once in a while. It's not the end of the price war, but you could call it a ceasefire.
• Intel also had a large increase in new unit volume in flash memory chips -- but that segment still reported a sizable operating loss. The company is spinning out some of its flash assets in a joint venture with STMicroelectronics (NYSE: STM  ) , presumably to limit the negative exposure to a low-profit market.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q3 2007	Q3 2006	Change
Sales	$10,090	$8,739	15.5%
Net Profit	$1,860	$1,301	43%
EPS	$0.31	$0.22	40.9%
Diluted Shares	5,967	5,832	2.3%

Get back to basics with the income statement.

Margin Checkup

	Q3 2007	Q3 2006	Change*
Gross Margin	52.4%	49.1%	3.2
Operating Margin	22.3%	15.7%	6.6
Net Margin	18.4%	14.9%	3.5

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q3 2007	Q3 2006	Change
Cash + ST Invest.	$10,796	$7,123	51.6%
Accounts Rec.	$2,933	$3,358	(12.7%)
Inventory	$3,541	$4,477	(20.9%)

Liabilities	Q3 2007	Q3 2006	Change
Accounts Payable	$2,338	$2,401	(2.6%)
Long-Term Debt	$1,853	$2,060	(10%)

The balance sheet reflects the company's health.

Cash Flow Highlights

	Q3 2007	Q3 2006	Change
Capital Expenditures	$1,088	$1,167	(6.8%)
Owner Earnings	$1,935	$1,390	39.2%

Free cash flow is a Fool's best friend.

Competitive Breakdown

	Y-O-Y Revenue Growth	Net Income Margin
Intel	15.5%	18.4%
AMD (NYSE:AMD)	13.3%	(43.5%)
Texas Instruments (NYSE:TXN)	(7.4%)	17.8%
Broadcom (NASDAQ:BRCM)	(4.6%)	3.8%
NVIDIA (NASDAQ:NVDA)	36%	18.5%

Using the latest reported numbers from Capital IQ. Nobody is anybody without some context.

Related Foolishness:

• Foolish Forecast: Wow Us, Intel
• Quick Take: AMD's Talent Theft
• 5 More Stocks Under Attack