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.

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