Christopher Gro...'s  Instablog

Intel, during the five quarters of observation beginning September 25, 2010 and ending October 1, 2011 increased revenue and net income. Cost of sales as a percentage of net revenue increased and research and development expenditure remained relatively constant at 15 per cent of net revenue. The percentage increase in net income over the five quarter period was 18.6.    

In the three months ending September 25, 2010 net revenue was $11.1 billion. Net revenue grew to $14.2 billion in the three months ending October 1, 2011. Net revenue increased all five quarters at a 5.1 per cent quarterly pace. The percentage increase in net revenue over last year was 28.2. 

Cost of sales in the three months ending September 25, 2010 was $3.8 billion and grew to $5.2 billion in the three months ending October 1, 2011. Cost of sales increased in all five quarters at a 6.64 per cent quarterly pace. The percentage increase in cost of sales over last year was 36.8. Cost of sales as a percentage of net revenue increased from 34 per cent to a high of 39 per cent (in the quarter ending July 2, 2011). However, in the period ending October 21st cost of sales as a percentage of net revenue (36 per cent) declined to the lowest level since the quarter ending December 25, 2010 (35 per cent). 

In the three months ending September 25, 2010 gross margin was $7.3 billion and increased to $9 billion in the quarter ending October 1, 2011. Gross margin increased in all five quarters at a 4.25 per cent quarterly pace. The percentage increase in gross margin over last year was 23.2. Changes in gross margin as a percentage of net revenue reflected changes in cost of sales. 

Outlays on research and development remained at 15 per cent of net revenue plus or minus a few basis points. Research and development grew from $1.7 billion (Sept. 2010) to $2.1 billion (Oct. 2011) a 23.5 per cent increase. Expenditures on research and development likely result in products with superior technology.

Marketing, general and administrative expense was roughly 14 per cent of net revenue during the five quarters. The outlay grew from $1.5 billion to $2 billion a 33 per cent increase. The pace of quarterly growth was 6 percent. 

Operating expenses in the three months ending September 25, 2010 were $3.2 billion and grew to $4.2 billion in the three months ending October 1, 2011. Operating expenses increased in all five quarters at a 5.85 per cent quarterly pace. The percentage increase in operating expenses over last year was 33. Operating expenses as a percentage of net revenue was roughly 29 per cent.
 
Operating income in the three months ending September 25, 2010 was $4.1 billion and grew to $4.8 billion in the three months ending October 1, 2011. Operating income increased at a 3.2 per cent quarterly pace. The percentage increase in operating income over last year was 17. Operating income as a percentage of net revenue decreased from 37 to 33.6 per cent.

Net income in the three months ending September 25, 2010 was $2.95 billion and grew to $3.5 billion in the three months ending October 1, 2011. Net income increased at a 3.2 per cent quarterly pace. The percentage increase in net income over last year was 18.6. Net income as a percentage of net revenue decreased from 26.6 to 24.4 per cent.
 
Bearish Factors
Net revenue, operating income, and net income are growing faster than Intel's sustainable growth rate (12.38 per cent), the rate of change of cost of sales and operating expenses are higher than revenue growth.

Bullish Factors
Outlays on research and development are 15 per cent of net revenue. Expenditures on research and development likely result in products with superior technology.  

 


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.