Osprey Flyer: Intel Q1 Earnings Flat at $3.2B (Financial Charts, Review) *Gross margin drops* INTC

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Intel reported Q1 2011 financial results on April 19, 2011

*Charts and commentary have been updated for Intel Q1 March 2011 financial results*

Intel Q1 Earnings Flat at $3.2B

Intel Summary Q1 2011 Intel Q1 2011 financial results were about the same as the prior quarter, a net income of about $3.2B for each quarter. Gross profit margin dropped, even though total revenues were a record $12.8B. Financial position continues strong. Intel's 2011 guidance, business outlook, is below the charts. The Q4 2010 financial statements were restated plus there was an accounting change, making QoQ comparisons difficult.

Intel Income Statement Q1 2011 Intel reported record total revenues of $12.8 billion, $3.2 billion net income, and $0.56 earnings per share. From the prior quarter Q4 2010, total revenues were up +12.1%, net income down -0.60%, and earnings per share were unchanged at 0.00%. From the prior year Q1 2010, total revenues were up +24.7%, net income up +29.4%, and earnings per share up +30.2%. The Q1 2011 gross margin dropped to 61.38% from 67.47% QoQ. The operating margin of 32.4% and net margin of 24.60% dropped accordingly.

Intel Balance Sheet Q1 2011 Total assets have reached an all-time high of $65.5 billion, after dipping as low as $48.5 billion in Q1 2009. Intel continues liquid and well capitalized. The current ratio, current assets / total assets, dropped to 34.8%. Capital to assets, total stockholders' equity / total assets, dropped to 72.2%, which below the historical range for Intel (75% to 80%). The liquidity and capital ratios decreased as a result of an accounting change, an increase in property, plant, and equipment (+$1.6B), and a restatement of the Q4 2010 financial statements. A new balance sheet item appeared in long-term assets, Identified Intangible Assets, of $6.872B.

Intel Performance by the Quarters (Charts)

Intel Earnings Per Share (Chart) Below is a chart of quarterly earnings per diluted share. Current earnings per share continued at $0.56 QoQ, but have remained above $0.50 for 4 consecutive quarters, since Q2 June 2010.

Intel Total Revenues, Operating Income, and Net Income (Chart) Below is a chart of quarterly total revenues, quarterly operating income, and quarterly net income. Total revenues continue to be impressive and are at an all-time high of $12.8 billion in Q1 2011. Current operating income of $4.1B appears to be an all-time high. Current net income of $3.16B is just below the Q4 2010 all-time high of $3.18B.

Intel Gross Margin, Operating Margin, and Net Margin (Chart) Below is a chart of quarterly gross margin, operating margin, and net margin. Gross margin for Q1 2011 of 61.38% dropped from Q4 2010 of 64.64%. Operating margin correspondingly decreased to 32.37%, which is the lowest since Q4 2009. Net margin for also decreased to 24.60%, but is still historically high.

Intel Return on Assets (Chart) Below is a chart of annual return on average assets per quarter. The total net income for the most recent 4 quarters is divided into average assets for the most recent 4 quarters to obtain a rolling annualized ROA, an annualized return on average assets for the 12 months (4 quarters) ended. The ROA dipped during the Global Recession but has improved for 4 consecutive quarters, as previous, poor-performance quarters drop out of the rolling, moving ROA to result in an increasing ROA. The Q1 2011 ROA was an impressive 20.46%. This indicates very effective and efficient deployment of assets.

Intel Geographic Revenues (Chart) Below is a chart of revenues by region. For the current Q1 2011 reported, the only noteworthy trend was an increase in Americas from 20.04% to 21.13% QoQ and a decrease in Europe from 13.81% to 12.80% QoQ.

Intel Growth Rates (Chart) Below is a chart of the quarterly (QoQ, Q/Q, quarterly change) growth rates for revenues and earnings per share. Intel is not a high growth company and stock but a very large technology company ($65B+ total assets). Growth rates are expected to be subdued now that Intel has bounced back from the lows of the Great Recession. Q1 2011 net revenues continued upwards +12.13% QoQ but earnings per share was flat at 0.00% mostly as a result of a decreased gross profit margin. The chart below covers only some recent quarters through the latest quarter reported. The rapid plunge in total revenues and earnings per share and the subsequent rebound as a result of the Great Recession and subsequent recovery resulted in some extreme percentages that obscure recent data.

Intel Reports First Quarter 2011 Financial Results

SANTA CLARA, Calif., April 19, 2011 - Corporation today reported record EPS and revenue on both a GAAP and non-GAAP basis.

On a non-GAAP basis, revenue was $12.9 billion, operating income was $4.3 billion, net income was $3.3 billion, and EPS was 59 cents. On a GAAP basis, the company reported first-quarter revenue of $12.8 billion, operating income of $4.2 billion, net income of $3.2 billion, and EPS of 56 cents.

The company generated approximately $4.0 billion in cash from operations, paid cash dividends of $994 million, and used $4.0 billion to repurchase 189 million shares of common stock.

"The first-quarter revenue was an all-time record for Intel fueled by double digit annual revenue growth in every major product segment and across all geographies," said Paul Otellini, Intel president and CEO. "These outstanding results, combined with our guidance for the second quarter, position us to achieve greater than 20 percent annual revenue growth."

Intel Q2 2011 and Full Year 2011 Business Outlook

Q2 2011

• Revenue: $12.8 billion, plus or minus $500 million.

• Gross margin percentage: 61 percent, plus or minus a couple percentage points.

Full-Year 2011

• Gross margin percentage: 63 percent, plus or minus a few percentage points.

• 2011 will have 53 weeks of business versus the typical 52 weeks, as the company realigns its fiscal year with the calendar year.

About Intel

Intel, the world leader in silicon innovation, develops technologies, products, and initiatives to continually advance how people work and live. Founded in 1968 to build semiconductor memory products, Intel introduced the world's first microprocessor in 1971. Intel's mission statement, values, and objectives:

Our mission

Delight our customers, employees, and shareholders by relentlessly delivering the platform and technology advancements that become essential to the way we work and live.

Our values

Customer orientation

Results orientation

Risk taking

Great place to work

Quality

Discipline

Our objectives

Extend our silicon technology and manufacturing leadership

Deliver unrivaled microprocessors and platforms

Grow profitability worldwide

Excel in customer orientation