Intel on the Rebound: Fool by Numbers

On Jan. 15, Intel (Nasdaq: INTC  ) released earnings for the 2007 fiscal year, the period ending Dec. 29.

  • Don't read too much into the impressive-looking profit growth and margin expansions. After all, 2006 was a disastrous year for Intel, and makes for easy year-over-year comparisons.
  • Even in lean years, the company remains a cash-minting machine, with an ironclad balance sheet to match. Management is mum on what it intends to do with its lavish loot, though.
  • Intel spent $2.75 billion on share buybacks in 2007; more than half of it in the fourth quarter. That still wasn't enough to cancel out the dilution from employees converting their bonus options.

(Figures in millions, except per-share data.)

Income Statement Highlights

FY 2007

FY 2006

Change

Sales

$38,334

$35,382

8.3%

Net Profit

$6,976

$5,044

38.3%

EPS

$1.18

$0.86

37.2%

Diluted Shares

5,936

5,880

1.0%

Get back to basics with the income statement.

Margin Checkup

FY 2007

FY 2006

Change*

Gross Margin

51.9%

51.5%

0.4

Operating Margin

21.4%

17.5%

3.9

Net Margin

18.2%

14.3%

3.9

*Expressed in percentage points.

Margins are the earnings engine.

Balance Sheet Highlights

Assets

FY 2007

FY 2006

Change

Cash + Short-term Investments

$12,797

$8,868

44.3%

Accounts Receivable

$2,576

$2,709

(4.9%)

Inventory

$3,370

$4,314

(21.9%)

Liabilities

FY 2007

FY 2006

Change

Accounts Payable

$2,361

$2,256

4.7%

Long-Term Debt

$1,980

$1,848

7.1%

The balance sheet reflects the company's health.

Cash Flow Highlights

FY 2007

FY 2006

Change

Cash From Ops.

$12,000

$10,620

13.0%

Capital Expenditures

$5,000

$5,779

(13.5%)

Free Cash Flow

$7,000

$4,841

44.6%

Owner Earnings

$6,774

$4,177

62.2%

Free cash flow is a Fool's best friend. Rough 2007 cash flow figures from Intel's earnings call; owner earnings calculated from reported figures.

Competitive Context

Market Cap (millions)

Trailing P/E Ratio

CAPS Rating

Intel

$115,770

19.2

****

Sun Microsystems (NASDAQ:JAVA)

$12,990

22.9

***

Marvell Technology Group (NASDAQ:MRVL)

$6,200

N/A

****

Micron Technology (NYSE:MU)

$4,260

N/A

**

Advanced Micro Devices (NYSE:AMD)

$3,240

N/A

**

Using the latest reported numbers from Capital IQ.

Keep your partners close and the competition in your vest pocket.

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