Intel going somewhere: no one knows if it is up or down

Posted by Emory Kale

Intel's income is down and the PC market is taking a battering. The company won't go bankrupt. Phew! But, it needs to figure out something for the post-PC era.

I could say a whole bunch about why it's hard to see things turning around at Intel because they just don't get the way computing is going. I could talk about the fact that they have made zero changes in their culture or organization that show they have a longer term vision that is bigger than, "We are going ultra-mobile.

 

 

I could mention the fact that they are getting their butts handed to them by ARM (there was a time when ARM wasn't even a pimple on Intel's butt and now, it is a whole new butt with its own grind - end of analogy).

What's the point? You can't turn this giant hunk of manufacturing around on a dime. You couldn't stop the Titanic on a dime, either, and look what happened there.

I don't think this is the last bad quarter we will see, and I don't think the PC slump is every going to stop slumping for a long time.

Here's the dish straight from Intel's announcement:

Q2 Key Financial Information and Business Unit Trends

  • PC Client Group revenue of $8.1 billion, up 1.4 percent sequentially and down 7.5 percent year-over-year.
  • Data Center Group revenue of $2.7 billion, up 6.1 percent sequentially and flat year-over-year.
  • Other Intel® Architecture Group revenue of $942 million, down 3.7 percent sequentially and down 15.0 percent year-over-year.
  • Gross margin of 58 percent, up 2 percentage points sequentially and down 5 percentage points year-over-year.
  • R&D plus MG&A spending of $4.7 billion, in line with the company's expectation of approximately $4.7 billion.
  • Tax rate of 26 percent.

 

Financial Comparison
Quarterly
  Q2 2013 Q1 2013 vs. Q1 2013
Revenue $12.8 billion $12.6 billion up 2%
Gross Margin 58.3% 56.2% up 2.1 pts.
Operating Income $2.7 billion $2.5 billion up 8%
Net Income $2.00 billion $2.05 billion down 2%
Earnings Per Share 39 cents 40 cents down 3%

 

Business Outlook

Intel's Business Outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures or other investments that may be completed after July 17.

 

Q3 2013

  • Revenue: $13.5 billion, plus or minus $500 million.
  • Gross margin percentage: 61 percent, plus or minus a couple of percentage points.
  • R&D plus MG&A spending: approximately $4.8 billion.
  • Amortization of acquisition-related intangibles: approximately $70 million.
  • Impact of equity investments and interest and other: approximately $400 million net gain.
  • Depreciation: approximately $1.7 billion.

 

Full-Year 2013

  • Revenue: Approximately flat year-on-year, down from prior expectations of low single digit percentage increase.
  • Gross margin percentage: 59 percent, plus or minus a couple percentage points, down from prior expectations of 60 percent, plus or minus a few of percentage points.
  • R&D plus MG&A spending: $18.7 billion, plus or minus $200 million, down $200 million from prior expectations.
  • Amortization of acquisition-related intangibles: approximately $300 million, unchanged from prior expectations.
  • Depreciation: $6.8 billion, plus or minus $100 million, unchanged from prior expectations.
  • Tax Rate: approximately 26 percent for each of the remaining quarters of the year.
  • Full-year capital spending: $11.0 billion, plus or minus $500 million, down $1.0 billion from prior expectations.