Intel Q4 2009 Earnings Report

[c1ue]

Looks pretty good, but a couple of interesting points.

http://files.shareholder.com/downloa...ease_Final.pdf

First the good news:

Intel Q4 2009 earnings cover.bmp

Looks great - especially against the 'kitchen sink' cleaning of Q4 2008

But first interesting point:

Intel Q4 2009 supplemental financials.bmp

The drop in capital spending YoY is quite impressive: over $700M or nearly 40%

This has ramifications for the semi tools industry

Second interesting point:

Intel Q4 2009 supplemental operating group.bmp

While PC operating group is up vs. last quarter and vs. Q4 last year in revenue and operating income, it is down YoY vs. full year 2009 vs 2008.

This is not so surprising, but what is very surprising is the operating income fall full year 2009 vs. full year on 2008.

This has nothing to do with the AMD settlement - you can see that the Q4 operating income number for 2009 is much larger than 2008.

In fact a $1.6B revenue fall for 2009 vs. 2008 is accompanied by a $1.8B fall in operating income - and the $7.587B operating income for all of 2009 had nearly half in Q4 2009: $3.34B

This does make me wonder about my previous speculation on potential margin losses due to switchover to netbooks.

There are also some 'non-financial instruments' differences to the tune of nearly $1B.

All in all, some very odd bits to this report. Looks like quite some financial engineering.

[sunskyfan]

Re: Intel Q4 2009 Earnings Report

I wonder how much "support" is government entities buying up their product. They are plowing up parking lots and repaving them on the base I work near/on.

[touchring]

Re: Intel Q4 2009 Earnings Report

This does make me wonder about my previous speculation on potential margin losses due to switchover to netbooks.

Atom Netbooks are cleverly marketed as lower powered versions of notebooks so people buy them as extras. It does not cannibalize regular notebook sales as much as believed.

I'm using a dual core Atom for my new server and it runs very much faster than my 3 year old P4.

[c1ue]

Re: Intel Q4 2009 Earnings Report

Atom Netbooks are cleverly marketed as lower powered versions of notebooks so people buy them as extras. It does not cannibalize regular notebook sales as much as believed.

Do you have some evidence for this?

For one thing, the laptop prices are converging down while netbook prices are converging up.

The laptop I am writing from - I paid $1050 for in the fall of 2006. A recent visit to Best Buy showed a newer version for $650.

In addition the netbooks for sale were outnumbered by the laptops approx. 4 to 1.

Yet despite this the netbook market appears to still be growing.

As for September 2009 - it appeared yearly total volume would be 285M units with around 25M being laptops (2% below 2008). This year the projection is for 37M netbook sales; unless total volume goes up proportionately then netbook growth must out of either laptop or desktop sales, or both.

[touchring]

Re: Intel Q4 2009 Earnings Report

Do you have some evidence for this?

As for September 2009 - it appeared yearly total volume would be 285M units with around 25M being laptops (2% below 2008). This year the projection is for 37M netbook sales; unless total volume goes up proportionately then netbook growth must out of either laptop or desktop sales, or both.

Based on Intel latest results and my personal opinion.

I feel that it is less likely, due to performance and ergonomics reasons, that a serious computer user will replace a regular notebook or PC with a miniature netbook with a miniature keyboard.

I for one use a PC at work and at home, and would use my notebook only when I'm outside.

[c1ue]

Re: Intel Q4 2009 Earnings Report

Based on Intel latest results and my personal opinion.

Intel's PC client group's results would not seem to validate your point.

Whole year results show a 10% drop in revenue YoY but a 20% drop in net income. This pretty much guarantees a margin drop - which would be one symptom of the replacement phenomenon.

The Q4 results are better, but again this might simply be due to corporate IT budgets being spent at the end of the year - the computers bought would largely be 'mainstream' CPUs vs. netbooks.

Either way time will tell.

[GRG55]

Re: Intel Q4 2009 Earnings Report

Do you have some evidence for this?

For one thing, the laptop prices are converging down while netbook prices are converging up.

The laptop I am writing from - I paid $1050 for in the fall of 2006. A recent visit to Best Buy showed a newer version for $650.

In addition the netbooks for sale were outnumbered by the laptops approx. 4 to 1.

Yet despite this the netbook market appears to still be growing.

As for September 2009 - it appeared yearly total volume would be 285M units with around 25M being laptops (2% below 2008). This year the projection is for 37M netbook sales; unless total volume goes up proportionately then netbook growth must out of either laptop or desktop sales, or both.

I doubt it's an "either or". The low price point of the netbooks has likely opened up new market...buyers such as young students who probably shared a computer with siblings/parents and now can have their own [the same way that many teens now have their own mobile phones as the prices dropped].

Another new market is people like me, who historically only had one fairly high powered computer. Having become totally frustrated at the performance compromises and time consumed to maintain Microsoft's operating systems in concert with ever more burdensome security software, I now use a netbook for online activity and keep my professional laptop off the connection most of the time. I don't much care if the netbook becomes infected as it is dispensible if necessary. By "quarantining" my laptop I save a lot of time that used to be devoted to downloading and installing constant software updates.

[touchring]

Re: Intel Q4 2009 Earnings Report

Another new market is people like me, who historically only had one fairly high powered computer. Having become totally frustrated at the performance compromises and time consumed to maintain Microsoft's operating systems in concert with ever more burdensome security software, I now use a netbook for online activity and keep my professional laptop off the connection most of the time. I don't much care if the netbook becomes infected as it is dispensible if necessary. By "quarantining" my laptop I save a lot of time that used to be devoted to downloading and installing constant software updates.

Another possible reason.

Unlike in the US and Europe, net phones such as blackberries and iphones are less popular in APAC. People prefer to use a notebook (and now a netbook) to surf or send email on the go. A netbook is becoming a blackberry and iphone alternative.

[c1ue]

Re: Intel Q4 2009 Earnings Report

http://www.reghardware.co.uk/2010/02...ipments_surge/

Last year was a good 12 months for netbook makers: together they shipped 30.2 million of the mini laptops.
That, market watcher Strategy Analytics said this week, is 79 per cent more than they managed in 2008.
To put that into context, fellow researcher IDC earlier this year put 2009's total PC shipments at 294.2m units. IDC didn't issue a specific figure for laptops, but you're looking at 50-60 per cent of that total being portable PCs: 147.1-176.52m units.
So netbooks accounted for around 17-20 per cent of the total - a long way, for now, from the 90 per cent share ARM CEO Warren East says we should anticipate. The segment's growth rate well exceeded the PC business as a whole, which, according to IDC, was up just 2.3 per cent on 2008.

So let's see: 294M PC = 102.3%, thus PC overall growth was 6.6M units.

Netbook growth: 30.2M = 179%, thus netbook growth was 13.3M units, with overall netbook hence Atom market share at over 10% of the overall market and 15% to 20% of the laptop market.

While certainly it is possible that all or most of the netbook sales were not cannibalization of other laptop/desktop sales and that the PC industry is simply falling - either way Intel's core business is directly correlated with average ASP*total industry volume*Intel market share due to its dominant position.

Unquestionably the Atom CPU's drive down average ASP.

Volumes are flat.

The question then is the ASP drop compensated for by the overall volume growth?

Doesn't seem likely...