Intel Q2 2014 financial result.

[ShintaiDK]

http://newsroom.intel.com/community...reports-second-quarter-revenue-of-138-billion

Very positive indeed. The chart speaks for itself.

 

[VirtualLarry]

Does this mean that their "contra revenue" isn't dragging down their financials much, or has that started yet / been accounted for yet?

 

[jdubs03]

Does this mean that their "contra revenue" isn't dragging down their financials much, or has that started yet / been accounted for yet?

The contra-revenue approach has led to a ~$1bn loss for Q2 for the tablet segment. I expect these losses will continue into next year, until Broxton.

 

[ShintaiDK]

Does this mean that their "contra revenue" isn't dragging down their financials much, or has that started yet / been accounted for yet?

It isnt dragging their financials down. Losses still continue while volume build up. As volume increases, the contra revenue decreases until it reaches profit.

 

[raghu78]

It isnt dragging their financials down. Losses still continue while volume build up. As volume increases, the contra revenue decreases until it reaches profit.

A loss of 1.15 billion dollars for Mobile and Communications when the overall income is 3.8 billion dollars is definitely called "dragging the financials down".

btw contra revenue will not go away till Intel moves to a lower cost structure with SOFIA manufactured at TSMC 28nm. Intel is losing roughly $28 per baytrail chip. you cannot make up loss per chip by shipping more volume. :whiste:

http://www.fool.com/investing/gener...tel-corporations-true-mobile-breakeven-p.aspx

 

[AtenRa]

Does this mean that their "contra revenue" isn't dragging down their financials much, or has that started yet / been accounted for yet?

Contra Revenue is calculated in the Mobile and Communication Group Revenue. Although they sold more than double the amount of BayTrail SoCs relatively to Q1 2014(10M units vs 5M), their M&C group revenue fell 67% Quarter to Quarter from 156M in Q1 2014 to just 51M on Q2 2014.

Also M&C Group made a bigger Income loss of 1,124B in Q2 2014 or 20% higher loss than 929M in Q1 2014 . So far M&C Group has lost 2,054B in the first half of 2014, not including Contra Revenue.

 

[Abwx]

The contra-revenue approach has led to a ~$1bn loss for Q2 for the tablet segment. I expect these losses will continue into next year, until Broxton.

51 millions revenue for about 7-10 millions mobile chips, that s 5-6$ per chip.

Mobile and Communications Group revenue of $51 million, down 67 percent sequentially and down 83 percent year-over-year.

Losses on mobile should be on on the same ball park if not worse than previous quarter.

 

[NTMBK]

Mobile and Communications Group revenue of $51 million, down 67 percent sequentially and down 83 percent year-over-year.

That's a $1.1bn loss on mobile. In a single quarter.

Still, the PC Client Group is bouncing back nicely! Looks like the imminent death of the PC may have been rather exaggerated

 

[Abwx]

A loss of 1.15 billion dollars for Mobile and Communications when the overall income is 3.8 billion dollars is definitely called "dragging the financials down".

btw contra revenue will not go away till Intel moves to a lower cost structure with SOFIA manufactured at TSMC 28nm. Intel is losing roughly $28 per baytrail chip. you cannot make up loss per chip by shipping more volume. :whiste:

http://www.fool.com/investing/gener...tel-corporations-true-mobile-breakeven-p.aspx

Assuming that their mobile dpt got as much for RD than AMD s whole RD this yield at least 700-800 millions losses for 10 millions chips , that is 70-80$ chips, not only chips are free but they also subside the BOM of each manufactured device at the rate of 50$/device.

 

[VirtualLarry]

Assuming that their mobile dpt got as much for RD than AMD s whole RD this yield at least 700-800 millions losses for 10 millions chips , that is 70-80$ chips, not only chips are free but they also subside the BOM of each manufactured device at the rate of 50$/device.

So we have Daddy Warbucks Intel to thank for the supposed arrival of $100 Windows 8.1 / Intel tablets... in their gambit to destroy the Android ecosystem. What if it doesn't work? What if Android holds on, and Windows 8.1 fails to take hold (Metro / Modern UI... eww!)? Will Intel continue to take losses, excuse me, "contra revenue", forever?

 

[ShintaiDK]

So we have Daddy Warbucks Intel to thank for the supposed arrival of $100 Windows 8.1 / Intel tablets... in their gambit to destroy the Android ecosystem. What if it doesn't work? What if Android holds on, and Windows 8.1 fails to take hold (Metro / Modern UI... eww!)? Will Intel continue to take losses, excuse me, "contra revenue", forever?

Android runs on x86 too....

 

[NTMBK]

Android runs on x86 too....

Well, sort of. If you don't mind compatibility problems.

 

[mrmt]

That's one of the best quarters ever for Intel. Everything was up. It probably would be a record breaking quarter if were not for the mobile group. Not even digitimes FUD that Intel wouldn't reach the mobile numbers targets materialized.

Btw, for a company that was supposedly buckling under CAPEX pressure, they seem to be pretty confident on their cash generation because they committed to a $20 billion stock repurchase.

 

[CHADBOGA]

Well, sort of. If you don't mind compatibility problems.

With Android's transition to 64bits and Intel's increasing marketshare, it is unlikely that will be a long term problem.

 

[NTMBK]

With Android's transition to 64bits and Intel's increasing marketshare, it is unlikely that will be a long term problem.

"Increasing marketshare"? Their mobile revenue is down 83% YoY.

 

[CHADBOGA]

"Increasing marketshare"? Their mobile revenue is down 83% YoY.

What do you think being on track to meet their 40 million tablet sales is about? :hmm:

 

[mrmt]

"Increasing marketshare"? Their NET mobile revenue is down 83% YoY.

FTFY.

Their mobile revenue might even be increasing but so does the contra-revenue volume, which results in smaller net revenue. Given that they went from shipping 5MM chips in Q1 to 10MM chips in Q2 and the mobile marketing isn't growing at 100% rates, yes, Intel market share increased.

 

[meloz]

Btw, for a company that was supposedly buckling under CAPEX pressure, they seem to be pretty confident on their cash generation because they committed to a $20 billion stock repurchase.

The source of their confidence is their total domination in the high-powered CPU segment. While the growth in mobile/portable segment might be huge numerically it is also a low margin market with various ARM players slitting each others throat to win ODM contracts.

Data center is where Intel sell their $1000-4000 Xeons and make absurd profits, and there is no challenge to Intel's domination in the forseeable future.

 

[guskline]

Nice quarter, Intel!

 

[mrmt]

The source of their confidence is their total domination in the high-powered CPU segment. While the growth in mobile/portable segment might be huge numerically but it is also a low margin market with various ARM players slitting each others throat to win ODM contracts.

I think Intel is extremely confident with the kind of position they can get with 14nm and 10nm. Given that TSMC is speeding up 7nm and not 10nm, Intel might indeed have got a winner.

 

[AtenRa]

Also worth noting,

Notebook Volumes increased (most probable due to SoCs) but ASP fell (also probable to SoCs).

On the other hand, Desktop volumes increased but ASPs also show an increase meaning they sold more High-End SKUs.

To me that's a sign that consumers are looking more about low power/low performance Mobile/Laptop devices but they spend more for High-End Desktop parts.

PC Client Group Notebook and Desktop Platform Key Drivers
- Notebook platform volumes increased 9% from Q2 2013 to Q2 2014
- Notebook platform average selling prices decreased 7% from Q2 2013 to Q2 2014
- Desktop platform volumes increased 8% from Q2 2013 to Q2 2014
- Desktop platform average selling prices increased 2% from Q2 2013 to Q2 2014

- Notebook platform volumes increased 6% from the first six months of 2013 to the first six months of 2014
- Notebook platform average selling prices decreased 8% from the first six months of 2013 to the first six months of 2014
- Desktop platform volumes increased 4% from the first six months of 2013 to the first six months of 2014
- Desktop platform average selling prices increased 3% from the first six months of 2013 to the first six months of 2014

 

[jpiniero]

Still think that the PC group sales increase was more about XP's support ending (and companies replacing very old machines) more than anything else, and whether that is sustainable. Which would explain the lower ASPs since they are obviously buying low end.

Gartner had reported that worldwide PC sales were flat versus the previous year, so that's likely very bad news for AMD. But I guess we will have to see.

 

[mrmt]

Still think that the PC group sales increase was more about XP's support ending (and companies replacing very old machines) more than anything else, and whether that is sustainable. Which would explain the lower ASPs since they are obviously buying low end.

The trend that I can see on the enterprise market is companies going straight to i5 desktops. That alone might warrant an increase in ASP in desktops. On notebooks the situation is quite the opposite, with companies aiming for bottom of the barrel chips.

 

[VirtualLarry]

To me that's a sign that consumers are looking more about low power/low performance Mobile/Laptop devices but they spend more for High-End Desktop parts.

I hope that's true. That bodes well for the enthusiast sector.

 

[VirtualLarry]

The trend that I can see on the enterprise market is companies going straight to i5 desktops. That alone might warrant an increase in ASP in desktops. On notebooks the situation is quite the opposite, with companies aiming for bottom of the barrel chips.

Considering the relative longevity of Intel's Core i5 chips (regardless of generation, although they have continuously gotten faster), it makes sense for companies to invest in quad-cores for the desktop, if they are buying rather than leasing.