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

  • 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 2013Q1 2013vs. Q1 2013
    Revenue$12.8 billion$12.6 billionup 2%
    Gross Margin58.3%56.2%up 2.1 pts.
    Operating Income$2.7 billion$2.5 billionup 8%
    Net Income$2.00 billion$2.05 billiondown 2%
    Earnings Per Share39 cents40 centsdown 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.

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