Osprey Flyer: Intel Q2 Earnings Dip to $2.95B (Financial Charts) *Record revenues fail to reach bottom line & shareholders* INTC

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Intel reported Q2 2011 financial results on Wednesday, July 20, 2011

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

Intel Q2 Earnings Dip to $2.95B: Record revenues don't reach bottom line & shareholders

Intel Summary Q2 2011 What to make of the Intel powerhouse? There is no "onwards and upwards" trend here. Intel Q2 2011 financial performance was okay, but not impressive. Record quarterly total revenues did not reach the bottom line and shareholders, being diminished by a lower gross profit margin and an increase in operating expenses. There is some bleeding occurring. Gross profit margin dropped for the 4th consecutive quarter and is at a 7-quarter low. Intel needs a big, and efficient, quarter to increase investor confidence, which was deflated somewhat by this latest report. Financial position continues strong. Intel's 2011 guidance, business outlook, is below the charts.

Intel Income Statement Q2 2011 Intel reported record total revenues of $13.03B, net income of $2.95B, and earnings per share of $0.54. From the prior quarter Q1 2011, total revenues were up +1.44%, net income down -6.52%, and earnings per share were down at -3.57%. From the prior year Q2 2010, total revenues were up +21.06%, net income up +2.32%, and earnings per share up +5.88%. The Q2 2011 gross margin dropped to 60.64% from 61.38% QoQ. The operating margin of 30.19% and net margin of 22.67% dropped accordingly. Return on assets dipped to 19.56%.

Intel Balance Sheet Q2 2011 Total assets have reached an all-time high of $66.09 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, was flat at 34.96%. Capital to assets, total stockholders' equity / total assets, increased slightly to 73.72%.

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 of $0.54 dipped from prior Q1 2011 of $0.56, but have remained above $0.50 for 5 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. Current Total Revenues of $13.03B are an all-time high and continue to be impressive. Current Operating Income of $3.94B dipped from prior Q1 2011 of $4.1B. This was mostly attributable to a lower gross margin and a disproportionate increase in marketing, general, and administrative expenses. Current Net Income of $2.95B also dipped from prior Q1 2011 of $3.16B for the same reasons as operating income.

Intel Gross Margin, Operating Margin, and Net Margin (Chart) Below is a chart of quarterly gross margin, operating margin, and net margin. Current Gross Margin of 60.64% is a 7-quarter low and of concern. Current Operating Margin correspondingly decreased to 30.19% and is a 6-quarter low. Current Net Margin of 22.67% also correspondingly decreased and is a 6-quarter low.

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. Current Return on Assets of 19.56% dipped from prior Q1 2011 of 20.12% and snapped a 6-quarter run of increases. While still impressive, prior year Q1 2010 contributed more to ROA than the current Q2 2011, hence the decrease in ROA.

Intel Geographic Revenues (Chart) Below is a chart of revenues by region. For the current Q2 2011, Asia Pacific of 56.71% of total revenues is flat from prior Q1 2011 of 56.53%. This indicates the lucrative Asia Pacific market is not being penetrated growing, for future growth, faster than overall sales? Americas of 22.32% continues trending upwards perhaps more by default as Europe and Japan decrease.

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 ($66+ billion total assets). Growth rates are expected to be subdued now that Intel has bounced back from the lows of the Great Recession. Current Total Revenues of +1.44% continue upwards for the 5th consecutive quarter. Current Earnings per Share of -3.57% is the first decrease since Q3 2009, and snaps 6 consecutive quarters of no decreases. 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 Fifth Consecutive Quarter of Record Revenue

SANTA CLARA, Calif., July 20, 2011 - Intel Corporation today reported its fifth consecutive quarter of record revenue, with double-digit revenue growth across all business segments.

GAAP Results

* Revenue: A record $13.0 billion, up $2.3 billion, 21 percent year-over-year

* Gross margin: 61 percent, down 6.6 percentage points year-over-year

* Operating income: $3.9 billion, down $46 million, 1 percent year-over-year

* Net income: $3.0 billion, up $67 million, 2 percent year-over-year

* EPS: 54 cents, up 3 cents, 6 percent year-over-year

On a Non-GAAP basis, revenue was $13.1 billion, operating income was $4.2 billion, net income was $3.2 billion, and EPS was 59 cents. On a GAAP basis, the company reported second-quarter revenue of $13.0 billion, operating income of $3.9 billion, net income of $3.0 billion, and EPS of 54 cents.

The company generated approximately $4.0 billion in cash from operations, paid cash dividends of $961 million, and used $2.0 billion to repurchase 93 million shares of common stock.

"We achieved a significant new milestone in the second quarter, surpassing $13.0 billion in revenue for the first time," said Paul Otellini, Intel president and CEO. "Strong corporate demand for our most advanced technology, the surge of mobile devices and Internet traffic fueling data center growth, and the rapid rise of computing in emerging markets drove record results. Intel's 23 percent revenue growth in the first half and our increasing confidence in the second half of 2011 position us to grow annual revenue in the mid-20 percent range."

Intel Q3 2011 and Full Year 2011 Business Outlook

Q3 2011 (GAAP)

• Revenue: $14.0 billion, plus or minus $500 million.

• Gross margin percentage: 64 percent, plus or minus a couple percentage points.

Full-Year 2011 (GAAP)

• 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