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 |
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%) |
|
$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% |
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