Intel Earnings Review: Decline Continues

Intel (INTC) earnings continue deteriorating. Financial performance is slowing for both revenues and earnings per share. Earnings per share of $0.48 is an 11-quarter low. Gross, operating, and net margins peaked in 2010, had recently been somewhat stable, and now are decreasing. Liquidity is strong. Capital is adequate, but the capital to assets ratio is decreasing.

CEO Paul Otellini continues to promise better days ahead through innovation. Meanwhile, technology races away from the Microsoft (MSFT)/Dell (DELL)/Intel (INTC) desktop way of life. The future benefit of sizable capital expenditures, along with research and development expenses, have yet to be realized. It is difficult to discount the intelligent people at Intel Labs, but their efforts have yet to reach the bottom line. The revenue outlook for the next quarter, QE March 2013, is a multi-year low (lowest since December 2010).

This chart is not what shareholders want to see.

Intel revenues have been flat and may decrease. Operating and net income have been decreasing.

Gross margin of 58.0% dropped to a 13-quarter low, operating margin of 26.6% hit a 12-quarter low, and net margin of 18.3% sank to a 9-quarter low. Both gross margin and operating margin are now below the long-term averages.

Intel did not report regional revenues this quarter, which is not encouraging. Segment revenues were:

Intel Outlook
Q1 2013 (GAAP, unless otherwise stated)

* Revenue: $12.7 billion, plus or minus $500 million.

* Gross margin percentage: 58 percent, plus or minus a couple of percentage points.

“The fourth quarter played out largely as expected as we continued to execute through a challenging environment,” said Paul Otellini, Intel president and CEO. “We made tremendous progress across the business in 2012 as we entered the market for smartphones and tablets, worked with our partners to reinvent the PC, and drove continued innovation and growth in the data center. As we enter 2013, our strong product pipeline has us well positioned to bring a new wave of Intel innovations across the spectrum of computing.”