Intel tops Q3 estimates

[Systems analyst]

April 2014, Intel reported $2 .8 billion earnings for 2014 Q1 PC group.
April 2015, Intel reported $1 .4 billion earnings in the combined PC + mobile group for 2015 Q1.
- This is a shortfall of $1 .4 billion earnings in a quarter.

July 2014, they reported $3.7 billion earnings for 2014 Q2 PC group.
July 2015, they reported $1 .6 billion earnings in the combined PC + mobile group for 2015 Q2.
- This is a shortfall of $2.1 billion earnings in a quarter.

October 2014, they reported $4.1 billion earnings for 2014 Q3 PC group.
October 2015, they reported $2.4 billion earnings in the combined PC + mobile group for 2015 Q3.
- This is a shortfall of $1.7 billion earnings in a quarter.


Projected 2015 Mobile/PC group shortfall c.f 2014 PC profits:
Q1 = 1.4, Q2=2.1, Q3=1.7, assume Q4=1.4
Total shortfall = 6.6 billion USD.
If 4.2 billion is attributable to Mobile,as per 2014, then PC shortfall for 2015 is 2.4 billion.
If 3.4 billion is attributable to Mobile, then PC shortfall for 2015 is 3.2 billion USD.

 

[Phynaz]

What shortfall? They beat estimates.

 

[teejee]

What shortfall? They beat estimates.

Do you know what estimates mean? At least your use of the word doesn't make sense. It is just what a bunch of market analysts predicted shortly before the report. It says nothing about absolute performance.

It gives a good indication of very short term stock development. Nothing else.

 

[frozentundra123456]

@Phynaz: What he is calculating is the difference between corresponding quarters with and without mobile, but it is not a valid calculation, because all of the "shortfall" from one year to the next could be from reduced sales, not the inclusion of mobile.

 

[Phynaz]

Looking at the numbers, AMD may have gained some market share.

Gartner says PC shipments declined by 7.7%, but Intel's shipments declined by 14%. AMD would have to make up the difference.

AMD also didnt warn this quarter.

 

[Phynaz]

Teejee, I dont need an education in reading an income statement, but thanks anyway.

 

[Arachnotronic]

Looking at the numbers, AMD may have gained some market share.

Gartner says PC shipments declined by 7.7%, but Intel's shipments declined by 14%. AMD would have to make up the difference.

AMD also didnt warn this quarter.

Nope, AMD's guidance calls for a ~30% decline in sales year-over-year. AMD's PC chip sales are outshrinking Intel's.

 

[Nothingness]

What shortfall? They beat estimates.

Indeed. But Intel lowered the expected growth for DCG, resulting in -3% after market stock price.

 

[witeken]

Intel doesn't have TSMC foundry expertise, but they certainly have enough resources to develop it in the long term, but short term there's something more relevant.

By reviewing Intel financial statements it seems that 14nm is still in bad shape, there are lots of mentions of high levels of defects and higher platform costs because of 14nm chips, it seems that 14nm won't be the cost-killer node that it was meant to be, and given that 10nm is shaping up to be leveraging a lot on 14nm ideas, I doubt that it will fare much better on the mobile market (maybe this is the reason behind Intel scaling back mobile efforts). That leaves the decisive dice rolls for 7nm, and that will be a game for the end of the decade.

The higher platform costs are normal. That's the case with every Tick. The second (or third...) year should be better, like Haswell. Stacy said that costs were still coming down quite steep.

 

[AtenRa]

Nope, AMD's guidance calls for a ~30% decline in sales year-over-year. AMD's PC chip sales are outshrinking Intel's.

AMD gave a guidance for Q3 2015 ?? link ??

 

[Arachnotronic]

AMD gave a guidance for Q3 2015 ?? link ??

 

[Arachnotronic]

The higher platform costs are normal. That's the case with every Tick. The second (or third...) year should be better, like Haswell. Stacy said that costs were still coming down quite steep.

This is the second year. HVM on 14nm began in Q1 2014. Intel is very clearly struggling with 14nm.

 

[AtenRa]

Im talking about the 30% decline you said above.

 

[Arachnotronic]

Im talking about the 30% decline you said above.

http://finance.yahoo.com/q/ae?s=AMD+Analyst+Estimates

 

[AtenRa]

http://finance.yahoo.com/q/ae?s=AMD+Analyst+Estimates

This is not for the PC shipments but the overall Revenue of the Quarter. Im not saying they will do better or worst but at this point we should wait for the Thursday results first.

 

[Arachnotronic]

This is not for the PC shipments but the overall Revenue of the Quarter. Im not saying they will do better or worst but at this point we should wait for the Thursday results first.

I don't think game console chip sales will decline by 30% y-o-y (this is a fairly good/stable business for AMD), and that's pretty much the "non-PC" part of AMD's business. I guess dGPUs could decline a bunch, too, but I suspect most of the y-o-y pain AMD will see will be from the continued erosion of its PC processor business.

 

[AtenRa]

I don't think game console chip sales will decline by 30% y-o-y (this is a fairly good/stable business for AMD), and that's pretty much the "non-PC" part of AMD's business. I guess dGPUs could decline a bunch, too, but I suspect most of the y-o-y pain AMD will see will be from the continued erosion of its PC processor business.

Yea i dont expect console sales to decline but what you said was 30% decline in the PC market. But 30% Revenue decline YoY includes all AMD sales like CPUs, APUs, Server, dGPUs etc etc.

anyway this is OT

 

[mrmt]

The higher platform costs are normal. That's the case with every Tick. The second (or third...) year should be better, like Haswell. Stacy said that costs were still coming down quite steep.

That if tick-tock was working, it isn't right now. Intel on the desktop was selling Haswell refresh, and on the notebooks they were selling Broadwell and Haswell refresh, and it seems that the broadwell/skylake mix is giving Intel a worse cost structure than the previous mix of Broadwell/Haswell on mobile and all Haswell on the desktop.

What Stacy is saying is that there's room for the costs to fall and they will work on it, but the big elephant in the room is that 14nm shouldn't be news on their quarterly results call by the second year of life, Intel should have been discussing the 10nm ramp up, and not placing notes about product defects caused by their 14nm process in their SEC fillings.

 

[Spungo]

More disgusting lies from corporate America.
"non-GAAP gross margin" = numbers we pulled out of our asses.

Actual margin using generally accepted accounting instead of Arthur Andersen style accounting is -19%.

 

[mrmt]

I don't think game console chip sales will decline by 30% y-o-y (this is a fairly good/stable business for AMD), and that's pretty much the "non-PC" part of AMD's business. I guess dGPUs could decline a bunch, too, but I suspect most of the y-o-y pain AMD will see will be from the continued erosion of its PC processor business.

FWIW I don't think it's useful to compare this year results to last years results in AMD's case, as the market has profoundly changed for them.

From what we see from their QoQ comparisons they are expecting a stable business on every front and small uplift caused by the peak of the semi-custom contracts that happen in Q3.

 

[mrmt]

More disgusting lies from corporate America.
"non-GAAP gross margin" = numbers we pulled out of our asses.

Actual margin using generally accepted accounting instead of Arthur Andersen style accounting is -19%.

Actually net profits aren't an interesting measure to calculate whether a business is faring well or not.

There are a myriad of reasons on why investors DEMAND from companies to release things like EBITDA, expenses and gross margins and just not the net profits and that's because net profits don't say much about the company's business or it's business decisions, it just says a lot on how the company played its balance sheet around.

 

[Arachnotronic]

There are a myriad of reasons on why investors DEMAND from companies to release things like EBITDA, expenses and gross margins and just not the net profits and that's because net profits don't say much about the company's business or it's business decisions, it just says a lot on how the company played its balance sheet around.

Indeed, although I would argue that EBITDA is probably not a great metric for capital intensive businesses like Intel.

But yeah, if you are an investor you shouldn't invest a dime without bare minimum reading the financial statements carefully to get a sense of how the business is doing. Proper due diligence should include a thorough reading of the most recent form 10-K and 10-Q filings.

 

[mrmt]

Indeed, although I would argue that EBITDA is probably not a great metric for capital intensive businesses like Intel.

Oh, I agree, and I'm sorry if my post implied something like that. I think that for any business, any single business you must look at a lot of metrics to get a clear picture, but of those net profits is one of the less useful options.

 

[NTMBK]

What Stacy is saying is that there's room for the costs to fall and they will work on it, but the big elephant in the room is that 14nm shouldn't be news on their quarterly results call by the second year of life, Intel should have been discussing the 10nm ramp up, and not placing notes about product defects caused by their 14nm process in their SEC fillings.

Capex is down, which I presume means that 10nm isn't coming any time soon.

 

[mrmt]

Capex is down, which I presume means that 10nm isn't coming any time soon.

10nm is already delayed, but Stacy Smith said that the the CAPEX change wasn't due to any downward trend, but more because of reshuffle in equipment orders. CAPEX should increase in 2016.