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Intel cuts capex budget by another $400M; gross margin in-line

Oct. 13, 2015 4:51 PM ETIntel Corporation (INTC) StockINTCBy: Eric Jhonsa, SA News Editor3 Comments
  • Intel (NASDAQ:INTC) has cut its 2015 capex budget for the fourth time: It's now at $7.3B (+/- $500M), down from $7.7B in July and $8.7B in April, and below a 2014 level of $10.1B.
  • Gross margin: Q3 gross margin was 63%, +50 bps Q/Q and -200 bps Y/Y, and in-line with guidance. Q4 GM guidance is at 62% (+/- 2%). Higher ASPs lifted Q3 GM, while higher platform unit costs weighed. Higher unit costs and factory start-up costs are expected to weigh on Q4 GM, partly offset by lower write-offs.
  • PC/mobile CPUs: Client Computing Group revenue -7% Y/Y to $8.5B, thanks largely to a weak PC market. Op. profit fell 20% to $2.4B. Volumes +3% Q/Q and -19% Y/Y. ASPs +9% Q/Q and +15% Y/Y. Desktop volumes -15% Y/Y, notebooks -14%, tablets -39%; all three segments had higher ASPs.
  • Server CPUs: With Web/cloud demand and the Grantley Xeon CPU launch still acting as tailwinds, Data Center Group revenue rose 12% Y/Y to $4.1B. Op. profit rose 9% to $2.1B. Volumes +7% Q/Q and +6% Y/Y. ASPs +1% Q/Q and +6% Y/Y.
  • Other segments: IoT Group revenue +10% Y/Y to $581M; op. profit +4% to $151M. Software/services revenue flat at $556M; op. profit up over 3x to $102M. Other (NOR/NAND flash, devices, one-time costs, etc.) revenue +19% to $682M; op. loss of $621M.
  • Financials: $1B was spent on buybacks, up from $697M in Q2. Thanks to lower R&D spend, R&D/MG&A spend was flat Y/Y at $4.8B ($100M below expectations). The tax rate was 26.9%, 90 bps above expectations. Intel ended Q3 with $20.8B in cash/investments ($10.3B offshore), and $21.2B in debt.
  • INTC +0.3% after hours to $32.13.
  • Q3 results/Q4 guidance, PR (.pdf), CFO commentary (.pdf)

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