12 March 2008

INTC: Financial Analysis through December 2007 (Updated)

Intel's (INTC) preliminary financial results for the quarter that ended on 29 December 2007 did not include a complete Cash Flow statement. In our initial analysis of these results, we estimated Net Cash Flow from Operations (CFO) from other data. Intel subsequently submitted a complete set of financial statements, which included the Cash Flow data, in a 10-K Annual Report filed with the SEC.

CFO was significantly greater in the quarter than we estimated.

We have updated our analysis, and recalculated the gauges, to incorporate the actual data.

The latest data changed the following metrics from the values reported earlier:
    • Debt/CFO = 0.2 years, unchanged from December 2006
    • CFO growth = 18.7 percent year-over-year, much better than our 8.3 percent estimate, and a major turn-around when compared to last year's -28 percent.
  • Accrual Ratio = 7.7 percent, up (i.e., worsening) from last year's -1.2 percent. We're employing a a different equation to compute this metric, and it is indicating a decline in quality of earnings.
  • FCF/Equity = 17.8 percent, up from 13.2 percent one year earlier

There's another point that needs to be made. Intel's share price was $26.66 on 31 December, when the quarter ended. This price was used in the calculation of the Value gauge score, in keeping with our standard practice. Now, however, Intel shares are around $21, and they were recently below $20 per share. We recalculated the scores with with a share price of $21. The Value gauge score increased from 0 to 8 points, and the Overall gauge increased from 33 to a much healthier 47 points.

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