Inside Intel: Fool by Numbers
By Anders Bylund
October 17, 2007
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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