Table of Contents
Rpt. 25245306 16-Jan-2015
INTEL CORP. DEUTSCHE BANK RESEARCH - SEYMORE, ROSS, ET AL
2 - 11
Rpt. 25246667 16-Jan-2015
INTEL CORP. BARCLAYS - CURTIS, BLAYNE, ET AL
12 - 26
Rpt. 25246720 16-Jan-2015
INTEL CORP. JPMORGAN - SUR, HARLAN, ET AL
27 - 39
Rpt. 25246960 16-Jan-2015
INTEL CORP. CREDIT SUISSE - NORTH AMERICA - PITZER, JOHN W, ET AL
40 - 52
Rpt. 25247228 16-Jan-2015
INTEL CORP. UBS RESEARCH - CHIN, STEPHEN, ET AL
53 - 67
Rpt. 25244893 16-Jan-2015
INTEL 4Q14 TAKEAWAY FOR ASIA TECH : PC STABLE, DATACENTER REMAINS STRONG; CAPEX CUT IN68 CONTRAST - 72 TO TSMC JPMORGAN - HARIHARAN, GOKUL, ET AL
Rpt. 25245266 16-Jan-2015
INTEL CORP. MORGAN STANLEY - MOORE, JOSEPH, ET AL
These reports were compiled using a product of Thomson Reuters
73 - 84
www.thomsonreuters.com
1
Deutsche Bank Markets Research Rating
Company
Buy
Intel
Date
15 January 2015
Results
North America
United States TMT
Reuters INTC.OQ
Bloomberg INTC US
Price at 15 Jan 2015 (USD)
Exchange Ticker NSM INTC
36.19
Price target
Semiconductors
42.00
52-week range
Solid print with margins to rise through 2015 Bullish thesis intact as DCG strength offsets PCG weakness INTC continues to execute superbly across all segments. DCG grew 11% q/q, which help offset the slight channel inventory burn in PCG. Importantly, the gap between Intel and PC market shipments shrunk considerably from 15% y/y in 3Q to 6% in 4Q. We remain confident in our thesis that INTC can continue to gain share in a stabilized PC market, see growth in DCG, shrink losses in Mobile, and return meaningful cash to shareholders ($12b repo remaining). This combination should lead to a market valuation multiple, thereby leading us to reiterate our Buy rating with a $42 P/T. 4Q EPS beat driven by strong DCG growth, better GM and lower tax rate 4Q revs of $14.7b (+6% q/q) were in line with guidance of $14.2-15.2b and consensus of $14.7b. PCG rev came in below our forecast declining -4% q/q (DBe +1% q/q), as Intel opted to burn low-end channel inventory. INTC shipped 46m units of tablets in 2014, exceeding its 40m unit target. DCG revs grew +11% q/q (DBe +2% q/q) on +5% unit growth and +7% ASP increase. MCG revs were -$6m as contra-revenues remained high. GM of 65.4% was above guidance mid-pt of 64% driven largely by higher platform ASPs. The resulting EPS of $0.74 was above DBe/Street estimates at $0.66, with ~$0.06 of the beat coming from lower tax rate and ~$0.02 from higher GM. Intel repurchased $4.0b (DBe $2.0b) of stocks in 4Q. Lower 1Q GM but no change to full year guidance INTC guided 1Q15 revs to $13.2-14.2b (-7% q/q at mid-pt), in line with DBe/Street. Gross margin is expected to be 60% +/- couple %, below DBe 62% and Street’s 61%. The decline in GM is driven by higher 14nm unit costs, 10nm start-up costs and lower volumes, but we believe GM will trough in 1Q with improvements to follow for the remainder of the year. INTC reiterated its 2015 targets for revenue (up mid-single digits) and GM (62%). We lowered our1Q15E EPS from $0.52 to $0.48 based on lower GM, but our 2015 estimate remains at $2.40 with a consistent 62% GM, assuming rev growth of 4% and share repo of $6b. We initiate our CY16 ests of $60.7b (+4.5% y/y)/$2.75.
37.67 - 23.52
Ross Seymore
Matt Diamond, CFA
Research Analyst (+1) 415 617-3268
[email protected]
Research Associate (+1) 415 617-3345
[email protected]
Sidney Ho Research Analyst (+1) 415 262-2061
[email protected] Key changes Price target
40.00 to 42.00 ↑
5.0%
57,759.9 to ↑ 58,082.6
0.6%
Revenue (USDm) Source: Deutsche Bank
Price/price relative 44 40 36 32 28 24 20 16 1/12
7/12
1/13
7/13
1/14
7/14
Intel S&P 500 INDEX (Rebased)
Performance (%)
1m
3m
12m
Absolute
0.8
15.7
35.7
S&P 500 INDEX
0.2
7.0
7.8
Source: Deutsche Bank
Maintain Buy; raising price target to $42 We are raising our P/T from $40 to $42 as we move to CY16-based valuation. Our P/T is based on a 2016 ex-cash P/E of ~14x, roughly in line with the broader market multiple. Our P/T is supported by a dividend yield of ~3%. Downside risks include slower PC/Server growth and lower MPU/NAND ASPs. Forecasts And Ratios Year End Dec 31 1Q EPS1 2Q EPS 3Q EPS 4Q EPS FY EPS (USD) P/E (x)
2014A 0.38 0.55 0.66 0.74 2.32 13.1
2015E 0.48 0.56 0.66 0.71 2.40 15.1
2016E 0.59 0.65 0.74 0.77 2.75 13.2
Source: Deutsche Bank estimates, company data 1
Includes the impact of FAS123R requiring the expensing of stock options.
________________________________________________________________________________________________________________ Deutsche Bank Securities Inc. Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 148/04/2014.
2
15 January 2015 Semiconductors Intel
Details Figure 1: Intel 4Q14 results summary Revenue
Street
DBe
Actual
$14,711
$14,703
$14,721
q/q
+1%
+1%
+1%
GM
64.0%
64.0%
65.4%
Core opex
$4,981
$4,892
$5,039
Tax rate
28%
21%
$0.66
$0.66
$0.74
$9,200
$9,270
$8,870
0%
+1%
-4%
$3,770
$3,758
$4,091
2%
+2%
+11%
$545
$504
$591
3%
-5%
+12%
EPS
Comments
Product segments PC Client Group q/q % Data Center Group q/q % Internet of Things Group q/q % Mobile & Communications Group
$18
$10
-$6
q/q %
N/M
N/M
N/M
Software & Services Group
$585
$586
557$
5%
+5%
0%
All Other
$583
$575
$617
q/q %
+1%
0%
+7%
$21,518
$21,151
$3,718
$4,273
q/q %
Balance sheet Cash and investments Inventory q/q %
-10%
+4%
DIOs
67 days
74 days
q/q
-4 days
+3 days
Source: Company data, ThomsonOne, StreetAccount, Deutsche Bank estimates,
Figure 2: Intel 4Q14 revenue mix Mobile & Comms 0%
IOT 4%
Software and Services 4%
Data Center 28%
Figure 3: 4Q14 segment revenue q/q growth
All Other 4%
PC Client 60%
14% 12% 10% 8% 6% 4% 2% 0% -2% -4% -6%
12%
11%
7% 5%
1%
2%
N/M N/M 0%
-3%
PC Client
Data Center
-5% IOT 4QA q/q
Source: Company reports, Deutsche Bank
Page 2
0%
Mobile & Software All Other Comms and Services 4QE q/q
Source: Company reports, Deutsche Bank estimates
Deutsche Bank Securities Inc.
3
15 January 2015 Semiconductors Intel
Estimates & revisions Intel provided the following 1Q15 guidance:
Revenue: $13.7b +/- $500m
GM: 60% (plus or minus a couple of ppts)
Core opex (R&D + SG&A): approx $4.9b
Depreciation: approx $1.8b
Amortization of intangibles: approx $65m
Restructuring expense: approx $40m
Intel’s full-year 2015 guidance is:
Revenue: growth in mid-single digit % y/y
Gross margin: 62% (plus or minus a couple of ppts)
Core opex: $20b +/- $400m (R&D $12.2b, MG&A $8.1b)
Depreciation: $8.1b +/- $100m
Amortization of intangibles: approx $255m
Tax rate: approx 27%
Capex: $10.0b plus or minus $500m
Figure 4: Intel 1Q15E revenue mix Software and Services 4% Mobile & Comms IOT 0%
Figure 5: 1Q15E segment q/q growth
All Other 4%
0% 0%
0% N/M
-1%
N/M
-2% -3% -4%
4%
-5% Data Center 28%
-5% -5%
-6% PC Client 60%
-7%
-5% -5%
-6% -6%
-8%
-9%
-8% -8%
PC Client
Data Center
IOT
1QE q/q (new) Source: Deutsche Bank estimates
Deutsche Bank Securities Inc.
Mobile & Comms
Software and Services
All Other
1QE q/q (old)
Source: Deutsche Bank estimates
Page 3
4
15 January 2015 Semiconductors Intel
Noting this guidance, our 1Q15 revenue/EPS estimates are revised $13.7b (-7% q/q)/$0.48 vs. $13.7b (-7% q/q)/$0.52 prior. We kept our 2015 revenue, GM and EPS largely unchanged at $58.1b, 62.0% and $2.40, respectively. We also introduced our CY16 estimates of $60.7b (+4.5% y/y)/$2.75. Figure 6: Intel estimate summary, 1Q15E – 2016E New 1Q15E Old 1Q15E New 2015E Revenue q/q or y/y growth GM GAAP EPS
Old 2015E New 2016E
$13,705
$13,655
$58,083
$57,760
$60,719
-7%
-7%
4%
3%
4.5%
60.0%
.62.3%
62.0%
62.0%
63.0%
$0.48
$0.52
$2.40
$2.40
$2.75
Source: Deutsche Bank estimates
Valuation & Risks Our $42 P/T is based on a 2016 ex-cash P/E of ~14x, roughly in line with the broader market multiple. Our P/T is further supported by an above market dividend yield of ~3%. Risks include slower PC unit growth, market share losses to AMD, declining NB growth, and a deteriorating product mix and/or average selling prices for MPUs, Chipsets, and flash memory. Perhaps not over the next 12 months, but the outcome of ongoing regulatory actions (EC-related primarily) and integration of acquisitions could impair Intel’s ability to grow.
Page 4
Deutsche Bank Securities Inc.
5
Cost of Goods Gross Profit Research and Development Selling, General and Admin. Amortization Charges Other Operating Exp. / (Inc.) Total Operating Expenses Operating Income Interest Income Interest Expense on ST Debt Interest Expense on LT Debt Interest Expense on Conv. Debt Total Interest Expense Other Non-oper. Exp. / (Inc.) Pretax Income Income Tax Expense / (Benefit) Minority Interest Equity in Net Income of Affil. Net Income Preferred Dividends Reported Net Income to Common Interest Add Back Reported Net Income for Diluted EPS GAAP Reported Basic EPS GAAP Reported Diluted EPS
Jun-13 Q2:13
Sep-13 Q3:13
Dec-13 Q4:13
Year 2013
Mar-14 Q1:14
Jun-14 Q2:14
Sep-14 Q3:14
Dec-14 Q4:14
Year 2014
Mar-15 Q1:15E
Jun-15 Q2:15E
Sep-15 Q3:15E
Dec-15 Q4:15E
Year 2015E
Mar-16 Q1:16E
Jun-16 Q2:16E
Sep-16 Q3:16E
Dec-16 Q4:16E
Year 2016E
$12,580.0 1,682.0
$12,811.0 1,712.0
$13,483.0 1,729.0
$13,834.0 1,667.0
$52,708.0 6,790.0
$12,764.0 1,720.0
$13,831.0 1,880.0
$14,554.0 1,891.0
$14,721.0 1,889.0
$55,870.0 7,380.0
$13,704.7 1,850.0
$14,253.6 1,950.0
$14,933.8 2,075.0
$15,190.5 2,225.0
$58,082.6 8,100.0
$14,285.2 2,275.0
$14,947.1 2,325.0
$15,667.3 2,375.0
$15,819.1 2,425.0
$60,718.8 9,400.0
12,868.0 35,622.0 11,537.0 8,126.0 294.0 295.0 20,252.0 15,370.0 133.0 0.0 219.0 0.0 219.0 (540.0) 15,824.0 4,103.0 0.0 0.0 11,721.0 0.0 11,721.0 0.0 $11,721.0
3,632.8 8,221.8 2,920.6 1,976.1 65.0 40.0 5,001.7 3,220.2 28.8 0.0 56.5 0.0 56.5 0.0 3,192.5 862.0 0.0 0.0 2,330.5 0.0 2,330.5 0.0 $2,330.5
3,533.3 8,770.4 3,002.0 1,962.6 65.0 0.0 5,029.5 3,740.8 29.7 0.0 56.5 0.0 56.5 0.0 3,714.0 1,002.8 0.0 0.0 2,711.2 0.0 2,711.2 0.0 $2,711.2
3,513.4 9,345.4 3,048.2 1,899.4 64.0 0.0 5,011.6 4,333.8 31.1 0.0 56.5 0.0 56.5 0.0 4,308.4 1,163.3 0.0 0.0 3,145.1 0.0 3,145.1 0.0 $3,145.1
3,318.8 9,646.7 3,062.6 1,894.1 63.0 0.0 5,019.7 4,627.0 36.9 0.0 56.5 0.0 56.5 0.0 4,607.5 1,244.0 0.0 0.0 3,363.5 0.0 3,363.5 0.0 $3,363.5
13,998.3 35,984.2 12,033.3 7,732.1 257.0 40.0 20,062.4 15,921.8 126.6 0.0 226.0 0.0 226.0 0.0 15,822.4 4,272.0 0.0 0.0 11,550.3 0.0 11,550.3 0.0 $11,550.3
3,132.5 8,877.7 3,072.9 1,924.1 62.0 0.0 5,059.0 3,818.8 44.9 0.0 56.5 0.0 56.5 0.0 3,807.2 1,027.9 0.0 0.0 2,779.2 0.0 2,779.2 0.0 $2,779.2
3,277.6 9,344.5 3,103.2 1,938.5 61.0 0.0 5,102.7 4,241.8 47.7 0.0 56.5 0.0 56.5 0.0 4,233.0 1,142.9 0.0 0.0 3,090.1 0.0 3,090.1 0.0 $3,090.1
3,336.7 9,955.6 3,119.5 1,992.7 60.0 0.0 5,172.2 4,783.4 52.9 0.0 56.5 0.0 56.5 0.0 4,779.8 1,290.5 0.0 0.0 3,489.3 0.0 3,489.3 0.0 $3,489.3
3,330.3 10,063.8 3,110.2 1,980.4 59.0 0.0 5,149.6 4,914.2 60.4 0.0 56.5 0.0 56.5 0.0 4,918.2 1,327.9 0.0 0.0 3,590.3 0.0 3,590.3 0.0 $3,590.3
13,077.1 38,241.7 12,405.9 7,835.6 242.0 0.0 20,483.5 17,758.2 206.0 0.0 226.0 0.0 226.0 0.0 17,738.2 4,789.3 0.0 0.0 12,948.9 0.0 12,948.9 0.0 $12,948.9
3,832.0 7,066.0 2,527.0 1,947.0 0.0 73.0 4,547.0 2,519.0 23.0 0.0 73.0 0.0 73.0 26.0 2,443.0 398.0 0.0 0.0 2,045.0 0.0 2,045.0 0.0 $2,045.0
3,629.0 7,470.0 2,516.0 2,165.0 0.0 70.0 4,751.0 2,719.0 26.0 0.0 60.0 0.0 60.0 (8.0) 2,693.0 693.0 0.0 0.0 2,000.0 0.0 2,000.0 0.0 $2,000.0
3,340.0 8,414.0 2,742.0 1,970.0 74.0 124.0 4,910.0 3,504.0 24.0 0.0 56.0 0.0 56.0 (452.0) 3,924.0 974.0 0.0 0.0 2,950.0 0.0 2,950.0 0.0 $2,950.0
3,596.0 8,571.0 2,826.0 2,006.0 74.0 116.0 5,022.0 3,549.0 24.0 0.0 58.0 0.0 58.0 (34.0) 3,549.0 926.0 0.0 0.0 2,623.0 0.0 2,623.0 0.0 $2,623.0
14,397.0 31,521.0 10,611.0 8,088.0 148.0 383.0 19,230.0 12,291.0 97.0 0.0 247.0 0.0 247.0 (468.0) 12,609.0 2,991.0 0.0 0.0 9,618.0 0.0 9,618.0 0.0 $9,618.0
3,418.0 7,626.0 2,846.0 2,037.0 73.0 137.0 5,093.0 2,533.0 28.0 0.0 58.0 0.0 58.0 (190.0) 2,693.0 746.0 0.0 0.0 1,947.0 0.0 1,947.0 0.0 $1,947.0
3,034.0 8,917.0 2,859.0 2,061.0 72.0 81.0 5,073.0 3,844.0 38.0 0.0 49.0 0.0 49.0 (89.0) 3,922.0 1,126.0 0.0 0.0 2,796.0 0.0 2,796.0 0.0 $2,796.0
3,205.0 9,458.0 2,842.0 1,979.0 77.0 20.0 4,918.0 4,540.0 35.0 0.0 53.0 0.0 53.0 (28.0) 4,550.0 1,233.0 0.0 0.0 3,317.0 0.0 3,317.0 0.0 $3,317.0
3,211.0 9,621.0 2,990.0 2,049.0 72.0 57.0 5,168.0 4,453.0 32.0 0.0 59.0 0.0 59.0 (233.0) 4,659.0 998.0 0.0 0.0 3,661.0 0.0 3,661.0 0.0 $3,661.0
$0.41 $0.40
$0.40 $0.39
$0.59 $0.58
$0.53 $0.51
$1.94 $1.89
$0.39 $0.38
$0.56 $0.55
$0.68 $0.66
$0.77 $0.74
$2.39 $2.32
$0.49 $0.48
$0.58 $0.56
$0.68 $0.66
$0.73 $0.71
$2.49 $2.40
$0.61 $0.59
$0.68 $0.65
$0.77 $0.74
$0.80 $0.77
$2.85 $2.75
Weighted Average Shares Out. (in '000s) 4,948,000 Diluted Shares (in '000s) 5,080,000
4,978,000 5,106,000
4,981,000 5,100,000
4,971,000 5,103,000
4,969,500 5,097,250
4,974,000 5,117,000
4,981,000 5,123,000
4,880,000 5,045,000
4,769,000 4,940,000
4,901,000 5,056,250
4,709,000 4,880,000
4,654,000 4,825,000
4,624,000 4,795,000
4,599,000 4,770,000
4,646,500 4,817,500
4,574,000 4,745,000
4,549,000 4,720,000
4,524,000 4,695,000
4,499,000 4,670,000
4,536,500 4,707,500
$295.0 $0.41 $0.40
$292.0 $0.40 $0.39
$268.0 $0.59 $0.58
$263.0 $0.53 $0.51
$1,118.0 $1.94 $1.89
$283.0 $0.39 $0.38
$303.0 $0.56 $0.55
$281.0 $0.68 $0.66
$281.0 $0.77 $0.74
$1,148.0 $2.39 $2.32
$281.0 $0.49 $0.48
$279.0 $0.58 $0.56
$277.0 $0.68 $0.66
$275.0 $0.73 $0.71
$1,112.0 $2.49 $2.40
$275.0 $0.61 $0.59
$273.0 $0.68 $0.65
$271.0 $0.77 $0.74
$269.0 $0.80 $0.77
$1,088.0 $2.85 $2.75
Net ESO Expense PF Basic EPS PF Diluted EPS Common Dividends Per Share
$0.23
$0.23
$0.23
$0.23
$0.90
$0.23
$0.23
$0.23
$0.23
$0.90
$0.24
$0.24
$0.24
$0.24
$0.96
$0.26
$0.26
$0.26
$0.26
$1.02
Nonrecurring Charges Tax Effect of Charges PF Net Income PF Net Inc. for Dil. EPS
$0.0 0.0 $2,340.0 $2,340.0
$0.0 0.0 $2,292.0 $2,292.0
$0.0 0.0 $3,218.0 $3,218.0
$0.0 0.0 $2,886.0 $2,886.0
$0.0 0.0 $10,736.0 $10,736.0
$0.0 0.0 $2,230.0 $2,230.0
$0.0 0.0 $3,099.0 $3,099.0
$0.0 0.0 $3,598.0 $3,598.0
$0.0 0.0 $3,942.0 $3,942.0
$0.0 0.0 $12,869.0 $12,869.0
$0.0 0.0 $2,611.5 $2,611.5
$0.0 0.0 $2,990.2 $2,990.2
$0.0 0.0 $3,422.1 $3,422.1
$0.0 0.0 $3,638.5 $3,638.5
$0.0 0.0 $12,662.3 $12,662.3
$0.0 0.0 $3,054.2 $3,054.2
$0.0 0.0 $3,363.1 $3,363.1
$0.0 0.0 $3,760.3 $3,760.3
$0.0 0.0 $3,859.3 $3,859.3
$0.0 0.0 $14,036.9 $14,036.9
PF Basic EPS PF Fully Diluted EPS
$0.47 $0.46
$0.46 $0.45
$0.65 $0.63
$0.58 $0.57
$2.16 $2.11
$0.45 $0.44
$0.62 $0.60
$0.74 $0.71
$0.83 $0.80
$2.63 $2.55
$0.55 $0.54
$0.64 $0.62
$0.74 $0.71
$0.79 $0.76
$2.73 $2.63
$0.67 $0.64
$0.74 $0.71
$0.83 $0.80
$0.86 $0.83
$3.09 $2.98
EBITDA EBIT TTM Revenues TTM EBITDA TTM EBIT TTM Pretax Income TTM Net Income TTM Net Income To Common TTM Dil. EPS TTM Gross Profit (Int Xp-Int inc)/Shr Net of Tax
4557.00 2,493.0 53,015.0 21,351.0 13,550.0 13,502.0 10,312.0 10,312.0 2.01 31,952.0 (0.01) (0.01)
4718.00 2,727.0 52,325.0 20,300.0 12,347.0 12,261.0 9,485.0 9,485.0 1.86 30,868.0 (0.01) (0.00)
Revenue % Change - Sequential EPS % Change - Sequential
(6.7%) (16.9%)
1.8% (2.7%)
5.2% 47.7%
2.6% (11.1%)
Revenue % Changes, yr. over yr. EPS % Change, yr. over yr.
(2.5%) (23.7%)
(5.1%) (28.0%)
0.2% 0.3%
2.6% 6.1%
56.2% 20.1 15.5 36.1 20.0 1.0 19.4 16.3 16.3
58.3% 19.6 16.9 37.1 21.2 0.6 21.0 25.7 15.6
62.4% 20.3 14.6 36.4 26.0 (2.8) 29.1 24.8 21.9
62.0% 20.4 14.5 36.3 25.7 0.3 25.7 26.1 19.0
Gross Margin R&D/Sales SG&A/Sales Operating Expenses Operating Margin Non-Operating Expenses/Sales Pretax Margin Tax Rate Net Margin
5883.00 3,956.0 52,351.0 20,378.0 12,391.0 12,264.0 9,463.0 9,463.0 1.86 30,767.0 (0.01) (0.00)
5539.00 3,583.0 52,708.0 20,697.0 12,759.0 12,609.0 9,618.0 9,618.0 1.89 31,521.0 (0.01) (0.00)
20697.00 12,759.0 52,708.0 20,697.0 12,759.0 12,609.0 9,618.0 9,618.0 1.89 31,521.0 (0.03) (0.02) NM NM
4730.00 2,723.0 52,892.0 20,870.0 12,989.0 12,859.0 9,520.0 9,520.0 1.86 32,081.0 (0.01) (0.00)
6103.00 3,933.0 53,912.0 22,255.0 14,195.0 14,088.0 10,316.0 10,316.0 2.02 33,528.0 (0.00) (0.00)
6766.00 4,568.0 54,983.0 23,138.0 14,807.0 14,714.0 10,683.0 10,683.0 2.10 34,572.0 (0.00) (0.00)
6854.00 4,686.0 55,870.0 24,453.0 15,910.0 15,824.0 11,721.0 11,721.0 2.32 35,622.0 (0.01) (0.00)
24453.00 15,910.0 55,870.0 24,453.0 15,910.0 15,824.0 11,721.0 11,721.0 2.32 35,622.0 (0.02) (0.01)
(7.7%) (26.0%)
8.4% 43.4%
5.2% 20.5%
1.1% 12.7%
NM NM
(1.2%) (11.5%)
1.5% (5.5%)
8.0% 39.3%
7.9% 13.7%
6.4% 44.2%
6.0% 22.9%
59.8% 20.1 15.3 36.5 23.3 (0.2) 23.9 23.7 18.2
59.7% 22.3 16.0 39.9 19.8 (0.8) 21.1 27.7 15.3
64.5% 20.7 14.9 36.7 27.8 (0.0) 28.4 28.7 20.2
65.0% 19.5 13.6 33.8 31.2 0.4 31.3 27.1 22.8
65.4% 20.3 13.9 35.1 30.2 (1.0) 31.6 21.4 24.9
63.8% 20.6 14.5 36.2 27.5 (0.3) 28.3 25.9 21.0
5135.17 3,220.2 56,810.7 24,858.2 16,407.2 16,323.5 12,104.5 12,104.5 2.42 36,217.8 (0.01) (0.00)
5755.82 3,740.8 57,233.3 24,511.0 16,215.0 16,115.5 12,019.8 12,019.8 2.44 36,071.2 (0.01) (0.00)
6472.78 4,333.8 57,613.1 24,217.8 15,980.8 15,873.9 11,847.9 11,847.9 2.44 35,958.6 (0.01) (0.00)
6915.03 4,627.0 58,082.6 24,278.8 15,921.8 15,822.4 11,550.3 11,550.3 2.40 35,984.2 (0.00) (0.00)
24278.80 15,921.8 58,082.6 24,278.8 15,921.8 15,822.4 11,550.3 11,550.3 2.40 35,984.2 (0.02) (0.02)
(6.9%) (35.6%)
4.0% 17.7%
4.8% 16.7%
1.7% 7.5%
7.4% 25.5%
3.1% 3.0%
2.6% (0.2%)
3.2% (4.9%)
4.0% 3.4%
61.5% 21.1 13.8 35.3 26.2 0.6 26.1 27.0 19.0
62.6% 20.4 12.7 33.6 29.0 0.6 28.8 27.0 21.1
63.5% 20.2 12.5 33.0 30.5 0.6 30.3 27.0 22.1
62.0% 20.7 13.3 34.5 27.4 0.6 27.2 27.0 19.9
60.0% 21.3 14.4 36.5 23.5 0.6 23.3 27.0 17.0
NM NM
3818.75 3,818.8 58,663.2 22,962.4 16,520.4 16,437.0 11,999.0 11,999.0 2.51 36,640.1 (0.00) (0.00)
4241.84 4,241.8 59,356.6 21,448.4 17,021.4 16,956.1 12,377.9 12,377.9 2.60 37,214.3 (0.00) (0.00)
4783.37 4,783.4 60,090.1 19,759.0 17,471.0 17,427.5 12,722.1 12,722.1 2.69 37,824.5 (0.00) (0.00)
4914.22 4,914.2 60,718.8 17,758.2 17,758.2 17,738.2 12,948.9 12,948.9 2.75 38,241.7 0.00 0.00
17758.18 17,758.2 60,718.8 17,758.2 17,758.2 17,738.2 12,948.9 12,948.9 2.75 38,241.7 (0.00) (0.00)
(6.0%) (16.9%)
4.6% 11.8%
4.8% 13.5%
1.0% 3.4%
NM NM
4.2% 22.6%
4.9% 16.5%
4.9% 13.3%
4.1% 9.0%
4.5% 14.7%
62.1% 21.5 13.5 35.4 26.7 0.7 26.7 27.0 19.5
62.5% 20.8 13.0 34.1 28.4 0.7 28.3 27.0 20.7
63.5% 19.9 12.7 33.0 30.5 0.7 30.5 27.0 22.3
63.6% 19.7 12.5 32.6 31.1 0.7 31.1 27.0 22.7
15 January 2015
Revenues Depreciation
Mar-13 Q1:13
Semiconductors
Intel
Deutsche Bank Securities Inc.
Figure 1: Intel income statement
63.0% 20.4 12.9 33.7 29.2 0.7 29.2 27.0 21.3
Page 5
Source: Company data, Deutsche Bank estimates
6
ASSETS: Cash and Cash Equivalents Short-Term Investments Accounts Receivable: Trade, Net of Allow ance For Doubtful Accounts Due to Affiliates Other Inventories: Raw Materials Work-In-Progress Finished Goods Deferred Tax Assets Prepaid Expenses Other Current Assets Total Current Assets Property, Plant and Equipment, net Long-Term Marketable Securities Investments Goodw ill Intangible Assets Net Assets of Discontinued Operations Long-Term Deferred Tax Assets Other Long-Term Assets Total Assets
Jun-13 Q2:13
Sep-13 Q3:13
Dec-13 Q4:13
$5,698.0 11,375.0 3,536.0 3,536.0
$3,778.0 13,572.0 3,474.0 3,474.0
$4,881.0 14,265.0 3,719.0 3,719.0
$5,674.0 14,413.0 3,582.0 3,582.0
4,358.0 451.0 2,129.0 1,778.0 2,109.0 0.0 1,601.0 28,677.0 28,418.0 1,309.0 4,698.0 9,756.0 5,807.0 0.0 0.0 4,418.0 $83,083.0
4,542.0 487.0 2,220.0 1,835.0 2,121.0 0.0 1,561.0 29,048.0 29,345.0 5,361.0 1,642.0 10,005.0 5,620.0 0.0 0.0 4,640.0 $85,661.0
4,533.0 505.0 2,259.0 1,769.0 2,435.0 0.0 1,517.0 31,350.0 30,346.0 6,514.0 1,583.0 10,467.0 5,434.0 0.0 0.0 4,857.0 $90,551.0
$88.0 2,654.0 1,501.0 0.0 1,901.0 5,654.0 11,798.0 13,143.0 0.0 0.0 3,427.0 3,521.0 31,889.0 0.0 0.0 51,194.0 19,688.0 31,506.0 0.0 0.0 $83,083.0
$263.0 2,864.0 1,981.0 0.0 1,971.0 4,310.0 11,389.0 13,150.0 0.0 0.0 3,709.0 3,573.0 31,821.0 0.0 0.0 53,840.0 20,823.0 33,017.0 0.0 0.0 $85,661.0
26 13.7 74 4.9 50 $10.08 $1.01
Year 2013
Mar-14 Q1:14
Jun-14 Q2:14
Sep-14 Q3:14
Dec-14 Q4:14
$4,777.0 14,269.0 3,505.0 3,505.0
$3,049.0 14,262.0 3,489.0 3,489.0
$3,143.0 12,451.0 3,647.0 3,647.0
$2,561.0 11,493.0 4,427.0 4,427.0
4,172.0 458.0 1,998.0 1,716.0 2,594.0 0.0 1,649.0 32,084.0 31,428.0 6,221.0 1,473.0 10,513.0 5,150.0 0.0 0.0 5,489.0 $92,358.0
$5,674.0 14,413.0 3,582.0 3,582.0 0.0 0.0 4,172.0 458.0 1,998.0 1,716.0 2,594.0 0.0 1,649.0 32,084.0 31,428.0 6,221.0 1,473.0 10,513.0 5,150.0 0.0 0.0 5,489.0 $92,358.0
3,763.0 463.0 1,803.0 1,497.0 2,507.0 0.0 1,733.0 30,554.0 32,502.0 6,085.0 1,765.0 10,617.0 4,963.0 0.0 0.0 5,446.0 $91,932.0
3,943.0 503.0 2,071.0 1,369.0 2,255.0 0.0 2,008.0 29,006.0 33,115.0 6,044.0 2,184.0 10,621.0 4,697.0 0.0 0.0 6,126.0 $91,793.0
4,115.0 496.0 2,292.0 1,327.0 1,674.0 0.0 2,479.0 27,509.0 33,135.0 6,514.0 2,153.0 10,556.0 4,379.0 0.0 0.0 6,370.0 $90,616.0
$350.0 2,996.0 2,530.0 0.0 2,093.0 5,906.0 13,875.0 13,157.0 0.0 0.0 4,384.0 3,683.0 35,099.0 0.0 0.0 55,452.0 20,885.7 34,566.3 0.0 0.0 $90,551
$281.0 2,969.0 3,123.0 0.0 2,096.0 5,099.0 13,568.0 13,165.0 0.0 0.0 4,397.0 2,972.0 34,102.0 0.0 0.0 58,256.0 22,779.0 35,477.0 0.0 0.0 $92,358.0
$281.0 2,969.0 3,123.0 0.0 2,096.0 5,099.0 13,568.0 13,165.0 0.0 0.0 4,397.0 2,972.0 34,102.0 0.0 0.0 58,256.0 22,779.0 35,477.0 0.0 0.0 $92,358.0
$36.0 3,010.0 2,998.0 0.0 2,171.0 5,337.0 13,552.0 13,172.0 0.0 0.0 4,302.0 2,868.0 33,894.0 0.0 0.0 58,038.0 22,166.0 35,872.0 0.0 0.0 $91,932.0
$14.0 2,960.0 2,409.0 0.0 2,171.0 4,697.0 12,251.0 13,180.0 0.0 0.0 4,187.0 2,928.0 32,546.0 0.0 0.0 59,247.0 22,475.0 36,772.0 0.0 0.0 $91,793.0
25 14.6 75 4.8 45
24 15.0 81 4.5 52
24 15.2 74 4.8 55
25 14.4 69 5.2 57
$10.54 $1.82
$10.87 $2.38
$11.42 $2.52
$11.34 $2.33
Year 2014
Mar-15 Q1:15E
Jun-15 Q2:15E
Sep-15 Q3:15E
Dec-15 Q4:15E
$5,396.4 7,493.0 3,758.3 3,758.3
$4,693.0 7,493.0 3,908.8 3,908.8
$5,690.3 7,493.0 3,929.4 3,929.4
$7,228.9 7,493.0 3,997.0 3,997.0
4,273.0 462.0 2,375.0 1,436.0 1,958.0 0.0 3,018.0 27,730.0 33,238.0 7,097.0 2,023.0 10,861.0 4,446.0 0.0 0.0 6,561.0 $91,956.0
$2,561.0 11,493.0 4,427.0 4,427.0 0.0 0.0 4,273.0 462.0 2,375.0 1,436.0 1,958.0 0.0 3,018.0 27,730.0 33,238.0 7,097.0 2,023.0 10,861.0 4,446.0 0.0 0.0 6,561.0 $91,956.0
4,387.0 0.0 0.0 0.0 1,766.5 0.0 2,722.8 25,523.9 33,888.0 7,097.0 2,023.0 10,861.0 4,381.0 0.0 0.0 6,561.0 $90,334.9
4,570.1 0.0 0.0 0.0 1,837.2 0.0 2,831.9 25,334.1 34,438.0 7,097.0 2,023.0 10,861.0 4,316.0 0.0 0.0 6,561.0 $90,630.1
4,782.0 0.0 0.0 0.0 1,924.9 0.0 2,967.0 26,786.6 34,863.0 7,097.0 2,023.0 10,861.0 4,252.0 0.0 0.0 6,561.0 $92,443.6
$1,164.0 2,597.0 2,931.0 0.0 2,189.0 6,023.0 14,904.0 12,103.0 0.0 0.0 3,551.0 3,985.0 34,543.0 0.0 0.0 56,073.0 21,894.0 34,179.0 0.0 0.0 $90,616.0
$1,604.0 2,748.0 3,475.0 0.0 2,205.0 5,987.0 16,019.0 12,107.0 0.0 0.0 3,775.0 4,190.0 36,091.0 0.0 0.0 55,865.0 21,781.0 34,084.0 0.0 0.0 $91,956.0
$1,604.0 2,748.0 3,475.0 0.0 2,205.0 5,987.0 16,019.0 12,107.0 0.0 0.0 3,775.0 4,190.0 36,091.0 0.0 0.0 55,865.0 21,781.0 34,084.0 0.0 0.0 $91,956.0
$1,604.0 2,786.8 3,135.1 0.0 1,989.3 5,401.4 14,916.6 12,107.0 0.0 0.0 3,775.0 4,190.0 34,988.6 0.0 0.0 55,346.4 21,781.0 33,565.4 0.0 0.0 $90,334.9
$1,604.0 2,787.0 3,260.7 0.0 2,069.0 5,617.7 15,338.4 12,107.0 0.0 0.0 3,775.0 4,190.0 35,410.4 0.0 0.0 55,219.6 21,781.0 33,438.6 0.0 0.0 $90,630.1
23 15.8 71 5.1 53
22 16.3 71 5.1 47
25 14.6 74 4.9 46
27 13.4 71 5.1 45
$11.56 $1.98
$11.11 $1.75
$11.31 $1.51
$11.34 $1.29
Year 2015E
Mar-16 Q1:16E
Jun-16 Q2:16E
Sep-16 Q3:16E
Dec-16 Q4:16E
Year 2016E
$6,946.1 7,493.0 3,758.8 3,758.8
$7,412.7 7,493.0 3,932.9 3,932.9
$8,400.9 7,493.0 3,948.3 3,948.3
$9,567.5 7,493.0 3,986.6 3,986.6
4,435.8 0.0 0.0 0.0 1,958.0 0.0 3,018.0 28,130.6 35,138.0 7,097.0 2,023.0 10,861.0 4,189.0 0.0 0.0 6,561.0 $93,999.6
$7,228.9 7,493.0 3,997.0 3,997.0 0.0 0.0 4,435.8 0.0 0.0 0.0 1,958.0 0.0 3,018.0 28,130.6 35,138.0 7,097.0 2,023.0 10,861.0 4,189.0 0.0 0.0 6,561.0 $93,999.6
4,627.1 0.0 0.0 0.0 1,841.3 0.0 2,838.1 27,504.5 35,463.0 7,097.0 2,023.0 10,861.0 4,127.0 0.0 0.0 6,561.0 $93,636.5
4,856.3 0.0 0.0 0.0 1,926.6 0.0 2,969.6 28,591.2 35,738.0 7,097.0 2,023.0 10,861.0 4,066.0 0.0 0.0 6,561.0 $94,937.2
5,077.8 0.0 0.0 0.0 2,019.5 0.0 3,112.7 30,052.3 35,963.0 7,097.0 2,023.0 10,861.0 4,006.0 0.0 0.0 6,561.0 $96,563.3
4,796.8 0.0 0.0 0.0 2,039.0 0.0 3,142.9 31,025.9 36,238.0 7,097.0 2,023.0 10,861.0 3,947.0 0.0 0.0 6,561.0 $97,752.9
$9,567.5 7,493.0 3,986.6 3,986.6 0.0 0.0 4,796.8 0.0 0.0 0.0 2,039.0 0.0 3,142.9 31,025.9 36,238.0 7,097.0 2,023.0 10,861.0 3,947.0 0.0 0.0 6,561.0 $97,752.9
$1,604.0 2,840.5 3,416.3 0.0 2,167.7 5,811.2 15,839.6 12,107.0 0.0 0.0 3,775.0 4,190.0 35,911.6 0.0 0.0 56,532.0 21,781.0 34,751.0 0.0 0.0 $92,443.6
$1,604.0 2,817.8 3,475.0 0.0 2,205.0 5,759.1 15,860.9 12,107.0 0.0 0.0 3,775.0 4,190.0 35,932.9 0.0 0.0 58,066.7 21,781.0 36,285.7 0.0 0.0 $93,999.6
$1,604.0 2,817.8 3,475.0 0.0 2,205.0 5,759.1 15,860.9 12,107.0 0.0 0.0 3,775.0 4,190.0 35,932.9 0.0 0.0 58,066.7 21,781.0 36,285.7 0.0 0.0 $93,999.6
$1,604.0 2,748.5 3,267.9 0.0 2,073.6 5,415.9 15,109.9 12,107.0 0.0 0.0 3,775.0 4,190.0 35,181.9 0.0 0.0 58,454.6 21,781.0 36,673.6 0.0 0.0 $93,636.5
$1,604.0 2,847.7 3,419.3 0.0 2,169.7 5,666.9 15,707.5 12,107.0 0.0 0.0 3,775.0 4,190.0 35,779.5 0.0 0.0 59,157.7 21,781.0 37,376.7 0.0 0.0 $94,937.2
$1,604.0 2,903.1 3,584.1 0.0 2,274.2 5,861.6 16,227.0 12,107.0 0.0 0.0 3,775.0 4,190.0 36,299.0 0.0 0.0 60,264.3 21,781.0 38,483.3 0.0 0.0 $96,563.3
$1,604.0 2,925.3 3,618.8 0.0 2,296.3 5,760.2 16,204.5 12,107.0 0.0 0.0 3,775.0 4,190.0 36,276.5 0.0 0.0 61,476.3 21,781.0 39,695.3 0.0 0.0 $97,752.9
$1,604.0 2,925.3 3,618.8 0.0 2,296.3 5,760.2 16,204.5 12,107.0 0.0 0.0 3,775.0 4,190.0 36,276.5 0.0 0.0 61,476.3 21,781.0 39,695.3 0.0 0.0 $97,752.9
24 14.9 74 4.9 44
24 15.2 75 4.8 44
23 15.3 75 4.8 49
24 14.7 75 4.8 45
23 15.5 76 4.7 43
23 15.9 78 4.6 44
23 15.9 77 4.7 48
$11.44 $1.15
$11.79 $1.37
$12.17 $1.70
$12.32 $1.65
$12.53 $1.76
$12.84 $1.98
$13.16 $2.24
15 January 2015
Mar-13 Q1:13
Semiconductors
Intel
Page 6
Figure 2: Intel balance sheet
LIABILITIES AND STOCKHOLDERS' EQUITY: Short-Term Borrow ings and Current Portion of L.T.D. Trade Accounts Payable Wages and Related Benefits Income Taxes Payable Deferred Revenue Other Current Liabilities Total Current Liabilities Long-Term Debt less current portion Long-Term Restructuring Liabilities Convertible Debt Deferred Tax Liabilities Other Long-Term Liabilities Total Liabilities Minority Interest Preferred Stock Stockholders' Equity: Common Stock / Additional Paid-In Capital Retained Earnings / (Accumulated Deficit) Other Cumulative Translation Adjustment Total Liabilities and Stockholders' Equity Days Sales Outstanding (DSOs) Receivable Turns Days Inventory Inventory Turns Days Payable Book Value per Diluted Share Net Cash per Diluted Share
Deutsche Bank Securities Inc.
L.T. Debt/Capital Total Debt/Capital
20.4% 20.5%
19.6% 19.9%
19.2% 19.6%
18.4% 18.8%
Return on Assets Return on Invested Capital Return on Equity
9.8% 12.7% 16.0%
9.5% 12.2% 15.2%
13.4% 17.3% 21.6%
11.5% 14.9% 18.5%
$11.42 $2.52
10.9% 14.1% 17.6%
18.5% 18.5%
18.2% 18.2%
17.8% 19.1%
17.8% 19.7%
8.5% 10.9% 13.4%
12.2% 15.6% 19.1%
14.5% 18.7% 23.0%
16.0% 21.1% 26.2%
$11.31 $1.51
12.7% 16.6% 20.5%
17.9% 19.9%
18.0% 19.9%
17.6% 19.5%
17.3% 19.1%
10.2% 13.4% 16.8%
12.0% 15.7% 19.6%
13.7% 18.1% 22.5%
14.4% 18.9% 23.5%
$12.17 $1.70
12.4% 16.3% 20.3%
17.2% 19.0%
17.0% 18.8%
16.7% 18.5%
16.5% 18.2%
11.8% 15.4% 19.1%
13.1% 17.0% 21.0%
14.6% 19.0% 23.4%
14.8% 19.3% 23.6%
$13.16 $2.24
13.5% 17.6% 21.7%
Source: Company data, Deutsche Bank estimates
7
15 January 2015 Semiconductors Intel
Appendix 1 Important Disclosures Additional information available upon request Disclosure checklist Company
Ticker
Recent price*
Disclosure
Intel
INTC.OQ
36.19 (USD) 15 Jan 15
2,7,8,14,15
*Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg and other vendors . Data is sourced from Deutsche Bank and subject companies.
Important Disclosures Required by U.S. Regulators Disclosures marked with an asterisk may also be required by at least one jurisdiction in addition to the United States. See Important Disclosures Required by Non-US Regulators and Explanatory Notes. 2.
Deutsche Bank and/or its affiliate(s) makes a market in securities issued by this company.
7.
Deutsche Bank and/or its affiliate(s) has received compensation from this company for the provision of investment banking or financial advisory services within the past year.
8.
Deutsche Bank and/or its affiliate(s) expects to receive, or intends to seek, compensation for investment banking services from this company in the next three months.
14. Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from this company within the past year. 15. This company has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services.
Important Disclosures Required by Non-U.S. Regulators Please also refer to disclosures in the Important Disclosures Required by US Regulators and the Explanatory Notes. 2.
Deutsche Bank and/or its affiliate(s) makes a market in securities issued by this company.
7.
Deutsche Bank and/or its affiliate(s) has received compensation from this company for the provision of investment banking or financial advisory services within the past year.
For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/Disclosure.eqsr?ricCode=INTC.OQ
Analyst Certification The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s) about the subject issuer and the securities of the issuer. In addition, the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendation or view in this report. Ross Seymore
Deutsche Bank Securities Inc.
Page 7
8
15 January 2015 Semiconductors Intel
Historical recommendations and target price: Intel (INTC.OQ) (as of 1/15/2015) 40.00
Previous Recommendations
35.00
2
30.00
1
Security Price
Strong Buy Buy Market Perform Underperform Not Rated Suspended Rating
9
3
25.00
7
6 4
8
5
Current Recommendations 20.00
Buy Hold Sell Not Rated Suspended Rating
15.00 10.00
*New Recommendation Structure as of September 9,2002
5.00 0.00 Jan 12
Apr 12
Jul 12
Oct 12
Jan 13
Apr 13
Jul 13
Date
Oct 13
Jan 14
Apr 14
Jul 14
Oct 14
1.
01/20/2012:
Buy, Target Price Change USD30.00
6.
11/22/2013:
2.
04/18/2012:
Buy, Target Price Change USD33.00
7.
04/16/2014:
Buy, Target Price Change USD30.00
3.
09/07/2012:
Buy, Target Price Change USD30.00
8.
06/13/2014:
Buy, Target Price Change USD35.00
4.
10/10/2012:
Buy, Target Price Change USD28.00
9.
07/16/2014:
Buy, Target Price Change USD40.00
5.
01/18/2013:
Buy, Target Price Change USD26.00
Equity rating key Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock. Sell: Based on a current 12-month view of total shareholder return, we recommend that investors sell the stock Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell. Notes: 1. Newly issued research recommendations and target prices always supersede previously published research. 2. Ratings definitions prior to 27 January, 2007 were:
Buy, Target Price Change USD28.00
Equity rating dispersion and banking relationships 600 500
51 %
47 %
400 300
54 % 39 %
200
2 % 24 %
100
0
Buy
Hold
Companies Covered
Sell
Cos. w/ Banking Relationship
North American Universe
Buy: Expected total return (including dividends) of 10% or more over a 12-month period Hold: Expected total return (including dividends) between -10% and 10% over a 12month period Sell: Expected total return (including dividends) of -10% or worse over a 12-month period
Page 8
Deutsche Bank Securities Inc.
9
15 January 2015 Semiconductors Intel
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Page 9
10
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Steve Pollard Regional Head Americas Research
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11
Equity Research Technology | U.S. Semiconductors 16 January 2015
Intel Corp.
ASPs Help Offset Softer Units, Q1 GM Impacted by 14nm INTC reported roughly in line revenue as units were down but ASPs offset, while EPS was ahead thanks to lower taxes on the reenactment of the U.S. R&D tax credit. Q1 revenue guidance is similarly in line, but GM and implied EPS below expectations due to lower initial 14nm yields and lower volumes. The lower unit volumes help narrow the gap vs. ODM shipments, but given the in line Q1 forecast (-7% Q/Q), there may still be a delta if ODMs are actually down 10-15% as currently expected. On the mobile front, losses actually accelerated, but the company believes it is on track to begin to close the negative revenue gap this year. We recognize the steady near-term results but remain on the sidelines given risk to PC unit volumes and our concerns that Intel's mobile strategy is no closer to turning the corner.
Stock Rating
EQUAL WEIGHT Unchanged
NEUTRAL
Industry View
Unchanged
USD 32.00
Price Target
Unchanged Price (15-Jan-2015)
USD 36.19
Potential Upside/Downside
-12%
Tickers
INTC
Market Cap (USD mn)
174979
Shares Outstanding (mn)
4835.00
Free Float (%)
99.92
52 Wk Avg Daily Volume (mn) Dividend Yield (%)
Q4 Revenue in Line, EPS Ahead on R&D Tax Credit Reenactment: Revenue of $14.72B was roughly in line with consensus of $14.69B. PCCG ($8.78B) was a bit below expectations, but DCG ($4.09B) delivered another strong quarter as Grantley ramped. For the 3rd quarter in a row, the magnitude of the ongoing decline/losses in MCG were somewhat surprising (-$6M in revenue & a $1.1B+ operating loss) but the segment should begin to recover as contra-revenue payments slow and new products such as SoFIA, Broxton, and the 7260 modem ramp in 2H15. GMs (65.4% vs. 64% guide – DCG ASPs particularly strong) were slightly better and Opex ($5.0B) slightly worse, but taxes (21% vs. 27% in Q3) were dramatically lower on the reenactment of the U.S. R&D tax credit yielding EPS of $0.74, ahead of consensus of $0.66. Q1 Guidance Revenue Guided in Line, GM and EPS Below: Guide of $13.7BN +/- $500M was in line with Street and roughly in line with typical seasonality. Intel declined to provide direction color by segment. GMs are expected to be down meaningfully (60.0%) as low initial 14nm yields begin to have an impact as Broadwell ramps - full year still 62%. This combined with slightly lower Opex ($4.9B) this yields implied EPS of $0.48, below Street $0.51 and closer to our $0.49. INTC: Quarterly and Annual EPS (USD) 2014 FY Dec
2.5
Return on Equity TTM (%)
19.13
Current BVPS (USD)
11.54
Source: Thomson Reuters
Price Performance 52 Week range
Exchange-Nasdaq USD 37.90-23.50
Link to Barclays Live for interactive charting
U.S. Semiconductors Blayne Curtis 1.617.342.4101
2015
2016
Change y/y
[email protected] BCI, New York
Actual
Old
New
Cons
Old
New
Cons
2015
2016
Q1
0.38A
0.49E
0.48E
0.51E
N/A
0.55E
0.59E
26%
15%
1.212.526.6374
Q2
0.55A
0.54E
0.54E
0.56E
N/A
0.63E
0.64E
-2%
17%
[email protected]
Q3
0.66A
0.68E
0.67E
0.65E
N/A
0.72E
0.71E
2%
7%
BCI, New York
Q4
0.74A
0.68E
0.68E
0.68E
N/A
0.74E
0.73E
-8%
9%
Ryan Mahon
Year
2.33A
2.39E
2.37E
2.37E
N/A
2.64E
2.65E
2%
11%
+1 212 526 0866
P/E
15.5
15.3
31.4
13.7
Source: Barclays Research. Consensus numbers are from Thomson Reuters
Christopher Hemmelgarn
[email protected] BCI, New York
Barclays Capital Inc. and/or one of its affiliates does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. PLEASE SEE ANALYST CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 9.
12
Barclays | Intel Corp. U.S. Semiconductors
Industry View: NEUTRAL
Intel Corp. (INTC) Income statement ($mn) Revenue EBITDA (adj) EBIT (adj) Pre-tax income (adj) Net income (adj) EPS (adj) ($) Diluted shares (mn) DPS ($)
Stock Rating: EQUAL WEIGHT 2014A 55,870 23,924 15,370 15,824 11,721 2.33 5,056.3 0.87
2015E 58,632 25,223 15,994 15,994 11,676 2.37 4,915.0 0.96
2016E 61,215 23,686 17,622 17,622 12,864 2.64 4,875.0 0.96
2017E N/A N/A N/A N/A N/A N/A N/A N/A
CAGR N/A N/A N/A N/A N/A N/A N/A N/A
Price (15-Jan-2015) USD 36.19 Price Target USD 32.00 Why Equal Weight? We believe shares will continue to be pressured by declining PC sales, further cannibalization from tablets, and a challenging path to success in mobile, but we see only limited downside risk from current levels given the 3-4% dividend yield and lack of a true negative catalyst. As such we maintain our Equal Weight rating and remain on the sidelines.
42.8 27.5 28.3 N/A 12.7 20.1
43.0 27.3 27.3 N/A 12.7 20.6
38.7 28.8 28.8 N/A 13.1 20.7
N/A N/A N/A N/A N/A N/A
Average 41.5 27.9 28.1 N/A 12.8 20.5
Upside case USD 40.00 Our upside case of $40 is based upon 14x our upside CY16 EPS of $2.85, which assumes sustained momentum in cloud and HPC and stronger growth in Enterprise servers, and a rebound in PC growth led by Skylakel.
Margin and return data EBITDA (adj) margin (%) EBIT (adj) margin (%) Pre-tax (adj) margin (%) Net (adj) margin (%) ROA (%) ROE (%)
Balance sheet and cash flow ($mn) Tangible fixed assets 33,238 Intangible fixed assets 15,307 Cash and equivalents 14,054 Total assets 91,956 Short and long-term debt 13,711 Other long-term liabilities 7,053 Total liabilities 35,179 Net debt/(funds) -343 Shareholders' equity 56,777 Change in working capital -6,805 Cash flow from operations 20,481 Capital expenditure -10,105 Free cash flow 10,376 Valuation and leverage metrics P/E (adj) (x) EV/sales (x) EV/EBITDA (adj) (x) Equity FCF yield (%) P/Sales (x) P/BV (x) Dividend yield (%)
15.5 3.2 7.5 5.7 3.2 3.2 2.4
35,168 15,307 17,772 97,989 13,711 7,053 35,947 -4,061 62,042 3,335 22,437 -10,000 12,437
36,501 15,307 22,779 104,632 13,711 7,053 36,111 -9,068 68,522 5,147 23,687 -10,000 13,687
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
CAGR N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
15.3 3.0 6.9 7.0 3.0 2.9 2.7
13.7 2.8 7.2 7.8 2.9 2.6 2.7
N/A N/A N/A N/A N/A N/A N/A
Average 14.8 3.0 7.2 6.8 3.1 2.9 2.6
Downside case USD 28.00 Our downside case of $28 is based upon 12x our downside CY16 EPS of $2.40, which assumes a greater decline in PC units, increased ASP pressure, and GM at lower end of target model. Upside/Downside scenarios
POINT® Quantitative Equity Scores
Value
Quality
Sentiment
Low
High
Source: POINT®. The scores are valid as of the date of this report and are independent of the fundamental analysts' views. To view the latest scores, please go to the equity company page on Barclays Live. Source: Company data, Barclays Research Note: FY End Dec
16 January 2015
2
13
Barclays | Intel Corp.
Q4 Revenue in Line, EPS Ahead on R&D Tax Credit Reenactment Revenue of $14.72B was roughly in line with consensus of $14.69B. PCCG ($8.78B) was a bit below expectations, but DCG ($4.09B) delivered another strong quarter as Grantley ramped. For the 3rd quarter in a row, the magnitude of the ongoing decline/losses in MCG were somewhat surprising (-$6M in revenue & a $1.1B+ operating loss) but the segment should begin to recover as contra-revenue payments slow and new products such as SoFIA, Broxton, and the 7260 modem ramp in 2H15. GMs (65.4% vs. 64% guide – DCG ASPs particularly strong) were slightly better and Opex ($5.0B) slightly worse, but taxes (21% vs. 27% in Q3) were dramatically lower on the reenactment of the U.S. R&D tax credit yielding EPS of $0.74, ahead of consensus of $0.66. FIGURE 1 December Quarter Results DECEMBER QUARTER RESULTS
Revenues Q/Q GMs R&D + MG&A Amort. of Acq. & Restr. Other Income Tax Rate GAAP EPS GAAP EPS ex 1x Share Count Depreciation Capex
Actual $14.72B 1.1% 65.4% $5.04B $129.0M $206.0M 21.4% $0.74 $0.74 4,940 $1.89B $2.14B
Revenues: PC Client Data Center IoT Mobile & Comm Software All Other
$8.87B $4.09B $0.59B -$0.01B $0.56B $0.62B
Old Barclays Ests
Consensus Ests
$14.71B 1.1% 64.0% $4.90B $110.0M $175.0M 28.0% $0.66 $0.66 4,965 $1.88B $3.00B
$14.69B 0.9% 64.0% $4.98B
$9.14B $3.78B $0.55B $0.05B $0.59B $0.60B
$9.20B $3.77B $0.55B $0.02B $0.59B $0.58B
Guide $14.7BN +/- $500M 64.0% +/- 2.0% $4.90B $110.0M $175.0M 28.0%
C DCG Stronger that expected, PCCG slightly worse Higher platform ASPs (+150bps), Lower factory start-up costs (+50bps), & Lower platform volumes (-50bps)
Up slightly Q/Q on increased profit dependent spending $57M in restructuring and asset impairment charges + $72M amortization Lower on re-enactment of US R&D tax credit
$0.66
$1.90B
Held to plans to repurchase ~$4B in Q4 under increased buyback authorization In line with expectations
Volumes slightly below expectations Volumes and ASPs both better than expected
Source: Company Reports, Thomson ONE, and Barclays Research
Q1 Guidance Revenue Guided in Line, GM and EPS Below Guide of $13.7BN +/- $500M was in line with Street and roughly in line with typical seasonality. Intel declined to provide direction color by segment. GMs are expected to be down meaningfully (60.0%) as low initial 14nm yields begin to have an impact as Broadwell ramps - full year still 62%. This combined with slightly lower Opex ($4.9B) this yields implied EPS of $0.48, below Street $0.51 and closer to our $0.49.
16 January 2015
3
14
Barclays | Intel Corp.
FIGURE 2 March Quarter Guidance MARCH QUARTER GUIDE
Revenues Q/Q GMs R&D + MG&A Amort. of Acq. & Restr. Other Income Tax Rate Implied GAAP EPS Implied GAAP EPS ex 1x Share Count Depreciation Capex Revenues: PC Client Data Center IoT Mobile & Comm Software All Other
Guide $13.7BN +/- $500M -10.3% to -3.5% 60.0% +/- 2.0% $4.90B $105.0M $0.0M 27.0% $0.48 $0.48 $1.80B
Old Barclays Ests
Consensus Ests
$13.71B -6.8% 61.0% $5.00B $70.0M $10.0M 27.0% $0.49 $0.49 4,955 $1.93B $2.63B
$13.75B -6.4% 61.2% $5.01B
$8.36B $3.66B $0.51B $0.06B $0.56B $0.57B
$8.46B $3.68B $0.52B $0.07B $0.56B $0.59B
Comments In line with typical Q1 seasonality Higher platform unit & start-up costs (-350bps), lower volumes (-100bps), & higher writeoffs (-50bps)
Down slightly Q/Q $45M in restructuring and asset impairment charges + $65M amortization Guided 27% for full year 2015
$0.51
Flat Q/Q Guided CY15 to $10B +/- $500M
Source: Company Reports, Thomson ONE, and Barclays Research
2015 Guidance Largely maintained prior guidance, but did reduce capex expectations to the low end of the prior range ($10B) and introduced depreciation guidance that is up ~$700M vs. 2014 as years of increasing capex begins to have an impact. FIGURE 3 Intel FY2015 Guidance
2015 Guide Revised
Prior
Comments
Rev Growth Revs GM GP Total Opex Amort of Acq OP Tax Rate Tax NP Shares
+5.0% $58.66B 62.0% $36.37B $20.00B $255M $16.12B 27.0% $4.35B $11.76B 4,915
+5.0% $58.65B 62.0% $36.36B $20.00B $280M $16.08B 27.0% $4.34B $11.74B 4,940
Up mid single digits YoY (unchanged)
Implied EPS Capex Depreciation
$2.39 $10.0B $8.1B
$2.38 $10.5B
Lower in 1H and higher in 2H (unchanged) +/- $400M (Unchanged) No previous guide No previous guide
We assume down 120M+ Y/Y on buybacks Down slightly Y/Y up $700M Y/Y
Source: Company Reports and Barclays Research
16 January 2015
4
15
Barclays | Intel Corp.
Adjusting Estimates and Introducing CY16 Our CY15 revenue/EPS move to $58.63B/$2.37 (prior $58.63B/$2.39) and we introduce CY16 of $61.21B/$2.64. Our price target remains $32 based on 12x our new CY16 EPS of $2.64 (vs. our prior basis of 13x our old CY15 EPS of $2.39). FIGURE 4 Changes in Estimates Changes to Revenue and EPS Estimates - New vs. Old vs. Consensus
NEW
Revenues EPS
Mar Q $13,740M $0.48
Jun Q $14,211M $0.54
CY15 $58,632M $2.37
OLD
Revenues EPS
$13,713M $0.49
$14,196M $0.54
$58,631M $2.39
CONSENSUS
Revenues EPS
$13,756M $0.51
$14,201M $0.56
$58,157M $2.39
CY16 $61,215M $2.64
$60,518M $2.67
Source: Company Reports, Thomson ONE, and Barclays Research
16 January 2015
5
16
Barclays | Intel Corp.
FIGURE 5 INTC Income Statement Intel Corporation Fiscal Year-End: December $ in millions Revenues QoQ YoY Cost of Goods GAAP - Gross Profit
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
2013
2014
2015
2016
1Q
2Q
3Q
4Q
1QE
2QE
3QE
4QE
1QE
2QE
3QE
4QE
CY
CY
CYE
CYE
$12,764
$13,831
$14,554
$14,721
$13,740
$14,211
$15,059
$15,622
$14,580
$14,988
$15,588
$16,059
$52,708
$55,870
$58,632
$61,215
-7.7%
8.4%
5.2%
1.1%
-6.7%
3.4%
6.0%
3.7%
-6.7%
2.8%
4.0%
3.0%
1.5%
8.0%
7.9%
6.4%
7.6%
2.7%
3.5%
6.1%
6.1%
5.5%
3.5%
2.8%
-1.2%
6.0%
4.9%
4.4%
5,138 4,914 5,096 5,100 5,496 5,471 5,421 5,890 5,759 5,620 5,612 5,942 21,187 20,248 22,278 22,933 _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ _________ $7,626
$8,917
$9,458
$9,621
$8,244
$8,740
$9,638
$9,733
$8,821
$9,367
$9,976
$10,117
$31,521
$35,622
$36,354
$38,282
R&D
2,846
2,859
2,842
2,990
2,875
2,925
2,975
2,975
3,000
3,000
3,000
3,000
10,611
11,537
11,750
12,000
SG&A
2,037
2,061
1,979
2,049
2,025
2,075
2,075
2,075
2,100
2,100
2,100
2,100
8,088
8,126
8,250
8,400
210
153
97
129
105
85
85
85
65
65
65
65
531
589
360
260
Amortization of Acq.& other Total Operating Expense Operating Income
$5,093 $5,073 $4,918 $5,168 $5,005 $5,085 $5,135 $5,135 $5,165 $5,165 $5,165 $5,165 $19,230 $20,252 $20,360 $20,660 _________ __________ __________ __________ _________ __________ __________ __________ _________ __________ __________ __________ __________ __________ __________ __________ $2,533
$3,844
$4,540
$4,453
$3,239
$3,655
$4,503
$4,598
$3,656
$4,202
$4,811
$4,952
$12,291
$15,370
$15,994
48
95
35
233
35
35
35
35
35
35
35
35
471
411
140
140
112
(17)
(25)
(27)
(35)
(35)
(35)
(35)
(35)
(35)
(35)
(35)
(151)
43
(140)
(140)
Gains (losses) on Investments Interest Income (expense) Profit Before Taxes Taxes Net Income - GAAP ex 1x
2,693
3,922
4,550
4,659
3,239
3,655
4,503
4,598
3,656
4,202
4,811
4,952
12,611
15,824
15,994
$17,622
17,622
746 1,126 1,233 998 875 987 1,216 1,241 987 1,135 1,299 1,337 2,991 4,103 4,318 4,758 _________ __________ __________ __________ _________ __________ __________ __________ _________ __________ __________ __________ __________ __________ __________ __________ $1,947
$2,796
$3,317
$3,661
$2,365
$2,668
$3,287
$3,356
$2,669
$3,068
$3,512
$3,615
$9,620
$11,721
$11,676
$12,864
EPS - GAAP ex 1x
$0.38
$0.55
$0.66
$0.74
$0.48
$0.54
$0.67
$0.68
$0.55
$0.63
$0.72
$0.74
$1.88
$2.33
$2.37
$2.64
EPS - GAAP
$0.38
$0.55
$0.66
$0.74
$0.48
$0.54
$0.67
$0.68
$0.55
$0.63
$0.72
$0.74
$1.88
$2.33
$2.37
$2.64
Dividends per share
0.23
0.23
0.23
0.23
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.24
0.90
0.90
0.96
0.96
Fully Diluted Shares
5,117
5,123
5,045
4,940
4,930
4,920
4,910
4,900
4,890
4,880
4,870
4,860
5,097
5,056
4,915
4,875
Percent of Sales GAAP Gross Margin
59.7%
64.5%
65.0%
65.4%
60.0%
61.5%
64.0%
62.3%
60.5%
62.5%
64.0%
63.0%
59.8%
63.8%
62.0%
62.5%
R&D
22.3%
20.7%
19.5%
20.3%
20.9%
20.6%
19.8%
19.0%
20.6%
20.0%
19.2%
18.7%
20.1%
20.6%
20.0%
19.6%
SG&A
16.0%
14.9%
13.6%
13.9%
14.7%
14.6%
13.8%
13.3%
14.4%
14.0%
13.5%
13.1%
15.3%
14.5%
14.1%
13.7%
Operating Income
19.8%
27.8%
31.2%
30.2%
23.6%
25.7%
29.9%
29.4%
25.1%
28.0%
30.9%
30.8%
23.3%
27.5%
27.3%
28.8%
Tax Rate Net Income
27.7% 15.3%
28.7% 20.2%
27.1% 22.8%
21.4% 24.9%
27.0% 17.2%
27.0% 18.8%
27.0% 21.8%
27.0% 21.5%
27.0% 18.3%
27.0% 20.5%
27.0% 22.5%
27.0% 22.5%
23.7% 18.3%
25.9% 21.0%
27.0% 19.9%
27.0% 21.0%
Sequential Change R&D
1%
0%
-1%
5%
-4%
2%
2%
0%
1%
0%
0%
0%
5%
9%
2%
2%
SG&A
2%
1%
-4%
4%
-1%
2%
0%
0%
1%
0%
0%
0%
0%
0%
2%
2%
Source: Company Reports & Barclays Research
16 January 2015
6
17
Barclays | Intel Corp.
FIGURE 6 INTC Balance Sheet Intel Corporation Fiscal Year-End: December $ in millions
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
2012
2013
2014
2015
2016
1Q
2Q
3Q
4Q
1QE
2QE
3QE
4QE
1QE
2QE
3QE
4QE
CY
CY
CY
CYE
CYE
BALANCE SHEET Assets Cash and Cash Equivalents Accounts Receivable Inventory - Raw Material Inventory - WIP Inventory - Finished Goods
$19,046
$17,311
$15,594
$14,054
$15,142
$15,655
$16,735
$17,772
$18,680
$19,773
$21,284
$22,779
$18,162
$20,087
$14,054
$17,772
$22,779
3,505
3,489
3,647
4,427
3,624
3,748
3,972
4,120
3,845
3,953
4,111
4,235
3,833
3,582
4,427
4,120
4,235
463
503
496
462
478
458
462
0
0
1,803
2,071
2,292
2,375
2,219
1,998
2,375
0
0
1,497
1,369
1,327
1,436
2,037
1,716
1,436
0
0
Total Inventories
3,763
3,943
4,115
4,273
4,349
4,329
4,289
4,660
4,557
4,447
4,440
4,701
4,734
4,172
4,273
4,660
4,701
Other
4,240
4,263
4,607
4,976
4,644
4,804
5,090
5,281
4,928
5,066
5,269
5,428
4,629
4,243
4,976
5,281
5,428
$30,554
$29,006
$27,963
$27,730
$27,759
$28,536
$30,086
$31,833
$32,010
$33,239
$31,358
$32,084
$27,730
$31,833
$37,144
Total Current Assets
$35,104
$37,144
Property and Equipment
32,502
33,115
33,135
33,238
33,901
34,328
34,716
35,168
35,633
35,933
36,180
36,501
27,983
31,428
33,238
35,168
36,501
Goodwill & Intangible Assets, Net
15,553
15,318
14,935
15,307
15,307
15,307
15,307
15,307
15,307
15,307
15,307
15,307
15,945
15,663
15,307
15,307
15,307
15,681
15,681
15,681
15,681
Other Assets
13,296
14,354
15,061
15,681
15,681
15,681
15,681
15,681
$91,905 ========
$91,793 ========
$91,094 ========
$91,956 ========
$92,648 ========
$93,852 ========
$95,790 ========
$97,989 ========
Accounts Payable
$3,010
$2,960
$2,597
$2,748
$3,020
$3,006
$2,979
$3,236
$3,164
$3,088
$3,083
Accrued Liabilities
2,998
3,476
4,031
4,567
4,263
4,409
4,672
4,847
4,523
4,650
4,836
Total Assets
13,183
15,681
15,681
$84,351 ========
$92,358 ========
$91,956 ========
$97,989 ========
$3,265
$3,023
$2,969
$2,748
$3,236
$3,265
4,982
3,987
4,144
4,567
4,847
4,982
$98,631 $100,160 $102,272 $104,632 ======== ======== ======== ========
9,065
15,681 $104,632 ========
Liabilities
Deferred Revenue
2,171
2,171
2,189
2,205
2,205
2,205
2,205
2,205
2,205
2,205
2,205
2,205
1,932
2,096
2,205
2,205
2,205
Other Current Liabilities
5,293
3,630
4,923
4,895
4,895
4,895
4,895
4,895
4,895
4,895
4,895
4,895
3,644
4,078
4,895
4,895
4,895
36
14
79
1,604
1,604
1,604
1,604
1,604
1,604
1,604
1,604
1,604
312
281
1,604
1,604
1,604
$13,508
$12,251
$13,819
$16,019
$15,987
$16,119
$16,355
$16,787
$16,392
$16,442
$16,623
$16,951
$12,898
$13,568
$16,019
$16,787
$16,951
Notes Payable
13,172
13,180
13,188
12,107
12,107
12,107
12,107
12,107
12,107
12,107
12,107
12,107
13,136
13,165
12,107
12,107
12,107
Other Liabilities
7,170
7,115
7,099
7,053
7,053
7,053
7,053
7,053
7,053
7,053
7,053
7,053
7,114
7,369
7,053
7,053
Current Portion of Notes Payable Total Current Liabilities
Total Liabilities
$33,850 ========
$32,546 ========
$34,106 ========
$35,179 ========
$35,147 ========
$35,279 ========
$35,515 ========
$35,947 ========
$35,552 ========
$35,602 ========
$35,783 ========
$36,111 ========
$33,148 ========
$34,102 ========
$35,179 ========
$35,947 ========
7,053 $36,111 ========
Shareholders' Equity Convertible Preferred Stock Shareholders' Equity Total Shareholders' Equity
58,055
59,247
56,988
56,777
57,502
58,573
60,276
62,042
63,079
64,558
66,489
68,522
$58,055
$59,247
$56,988
$56,777
$57,502
$58,573
$60,276
$62,042
$63,079
$64,558
$66,489
$68,522
======== Total Liabilities & Equity Check
========
========
========
========
========
========
========
========
========
========
========
51,203
58,256
56,777
62,042
68,522
51,203
58,256
56,777
62,042
68,522
========
========
========
========
========
$91,905
$91,793
$91,094
$91,956
$92,648
$93,852
$95,790
$97,989
$98,631
$100,160
$102,272
$104,632
$84,351
$92,358
$91,956
$97,989
$104,632
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
VALUATION RATIOS Profitability Ratios Return On Invested Capital
14.5%
21.5%
24.2%
26.9%
16.9%
19.2%
23.4%
23.6%
18.6%
21.3%
24.2%
24.7%
28.5%
20.9%
22.6%
20.9%
22.4%
Return On Equity
13.4%
19.3%
22.4%
25.7%
16.7%
18.6%
22.4%
22.3%
17.2%
19.5%
21.8%
21.7%
24.0%
18.8%
20.1%
20.6%
20.7%
Return On Avg Equity *
16.4%
17.6%
18.4%
20.6%
21.2%
20.7%
20.2%
19.1%
19.1%
19.4%
19.2%
19.1%
22.7%
17.6%
20.4%
19.7%
19.7%
8.4%
12.2%
14.5%
16.1%
10.3%
11.5%
14.0%
14.0%
10.9%
12.4%
14.0%
14.1%
15.5%
11.4%
12.7%
12.7%
13.1%
Return On Net Assets
Return On Assets
15.7%
22.4%
28.1%
32.6%
20.7%
22.8%
27.1%
26.7%
20.8%
23.3%
25.7%
25.5%
29.4%
20.7%
23.5%
26.0%
25.6%
Return On Sales
15.3%
20.2%
22.8%
24.9%
17.2%
18.8%
21.8%
21.5%
18.3%
20.5%
22.5%
22.5%
20.6%
18.3%
21.0%
19.9%
21.0%
* Avg Over Last 4 Qtrs Efficiency Ratios AR Turnover
15
16
16
13
15
15
15
15
15
15
15
15
14
15
13
14
14
A/R Days Sales Out
25
23
23
27
24
24
24
24
24
24
24
24
26
25
29
26
25
5
5
5
5
5
5
5
5
5
5
5
5
4
5
5
5
5
67
73
73
76
72
72
72
72
72
72
72
72
86
72
77
76
75
Inventory Turns Days of Inventory AP Turnover
7
7
8
7
7
7
7
7
7
7
7
7
7
7
7
7
7
Days Payable
53
55
46
49
50
50
50
50
50
50
50
50
55
51
50
53
52
Liquidity Ratios Current Ratio Quick Ratio Net Working Capital
2.3
2.4
2.0
1.7
1.7
1.8
1.8
1.9
2.0
2.0
2.1
2.2
2.4
2.4
1.7
1.9
2.2
2.0
2.0
1.7
1.5
1.5
1.5
1.6
1.6
1.7
1.8
1.8
1.9
2.1
2.1
1.5
1.6
1.9
$17,046
$16,755
$14,144
$11,711
$11,773
$12,417
$13,732
$15,046
$15,619
$16,797
$18,481
$20,193
$18,460
$18,516
$11,711
$15,046
$20,193
Long-term Debt / Equity
22.69%
22.25%
23.14%
21.32%
21.06%
20.67%
20.09%
19.51%
19.19%
18.75%
18.21%
17.67%
25.65%
22.60%
21.32%
19.51%
17.67%
Total Debt / Equity
22.75%
22.27%
23.28%
24.15%
23.84%
23.41%
22.75%
22.10%
21.74%
21.24%
20.62%
20.01%
26.26%
23.08%
24.15%
22.10%
20.01%
13.9%
20.6%
24.1%
22.9%
16.7%
18.7%
22.8%
22.9%
18.3%
20.9%
23.8%
24.2%
22.1%
17.0%
19.7%
19.9%
Op Inc / Assets, exc. Cash
21.5%
Book & Cash Value Book Value Per Share
$11.35
$11.56
$11.30
$11.49
$11.66
$11.91
$12.28
$12.66
$12.90
$13.23
$13.65
$14.10
$9.92
$11.43
$11.23
$12.62
$14.06
Tangible Book Value Per Share
$8.31
$8.57
$8.34
$8.39
$8.56
$8.79
$9.16
$9.54
$9.77
$10.09
$10.51
$10.95
$6.83
$8.36
$8.20
$9.51
$10.92
Free Cash Flow Per Share
$0.16
$0.51
$0.64
$0.75
$0.66
$0.55
$0.66
$0.66
$0.63
$0.67
$0.76
$0.75
$1.36
$1.97
$2.05
$2.53
$2.81
Cash Per Share
$3.72
$3.38
$3.09
$2.84
$3.07
$3.18
$3.41
$3.63
$3.82
$4.05
$4.37
$4.69
$3.52
$3.94
$2.78
$3.62
$4.67
Net Cash Per Share
$1.14
$0.80
$0.46
$0.07
$0.29
$0.40
$0.62
$0.83
$1.02
$1.24
$1.55
$1.87
$0.91
$1.30
$0.07
$0.83
$1.86
Source: Company Reports & Barclays Research
16 January 2015
7
18
Barclays | Intel Corp.
FIGURE 7 INTC Cash Flow Statement Intel Corporation Fiscal Year-End: December
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
2013
2014
2015
2016
1Q
2Q
3Q
4Q
1QE
2QE
3QE
4QE
1QE
2QE
3QE
4QE
CY
CY
CYE
CYE
$1,930
$2,796
$3,317
$3,661
$2,365
$2,668
$3,287
$3,356
$2,669
$3,068
$3,512
$3,615
$9,620
$11,704
$11,676
$12,864
283
303
281
281
281
281
281
281
281
281
281
281
1,118
1,148
1,124
1,124
Depreciation
1,720
1,880
1,891
1,889
1,837
2,073
2,112
2,048
2,035
2,200
2,253
2,180
6,790
7,380
8,070
8,668
Amortization
287
290
307
290
290
290
290
290
290
290
290
290
1,242
1,174
1,159
1,159
57
(200)
(199)
0
0
78
11
(165)
(780)
803
(124)
(224)
(149)
275
(107)
405
(170)
(176)
(158)
(76)
20
40
(371)
103
110
$ in millions CASH FLOW Cash Flow from Operations Net Income Share Based Compensation
Other
(1,134)
(342)
Changes in Operating Assets & Liabilities Accounts Receivable, net Inventories Prepaid Expenses & other Current Assets Accounts Payable Deferred Revenue
0
0
(95)
(8)
0
(158) 7
(124)
271
(856)
307
(115)
(261)
563
(99)
(387)
(41)
0 (189)
0 151
272
(14)
(27)
257
(72)
(76)
(5)
181
267
0 (141)
0
488
29
0
0
0
0
0
416
405
155
(408)
0
0
200
(112)
(278)
1,019
(190)
0
0
(135)
247
499
500
$3,501
$5,453
$5,693
$5,834
$5,772
$5,194
$5,758
$5,713
$5,581
$5,764
$6,180
($2,689)
($2,828)
($2,445)
($2,143)
($2,500)
($2,500)
($2,500)
($2,500)
($2,500)
($2,500)
($2,500)
(179)
(56)
(741)
Accured Compensation & Benefits
(1,229)
Income Tax Payable & Receivable Other Asset & Liabilities Net Cash From Operations
0
0
865
1,111
0
0
$6,162
$20,776
$20,481
$22,437
$23,687
($2,500)
($10,711)
($10,105)
($10,000)
($10,000)
(925)
(934)
Cash Flow from Investing PP&E Acquisition of Business
42
Purchases of IP licenses & Intangible Assets
0
Other
0
0 472
(6,401)
0 626
0
0
0
(102)
(1,259)
($2,749)
($4,266)
($986)
($2,412)
($2,500)
($2,500)
($2,500)
($2,500)
($2,500)
($2,500)
($2,500)
($2,500)
($18,073)
($10,413)
($10,000)
($10,000)
Proceeds from (repurchase) of common
($572)
($1,347)
($3,621)
($3,893)
($1,000)
($1,000)
($1,000)
($1,000)
($1,000)
($1,000)
($1,000)
($1,000)
($852)
($9,433)
($4,000)
($4,000)
Proceeds from (payment for) term loan
(245)
(22)
65
(31)
(202)
0
0
0
Net Cash from Investing
1,515
(36)
0 0
0
Cash Flow from Financing
Proceeds from (payment for) capital lease & tec
0
Payment of Dividend to Shareholders
(1,119)
Others Net Cash from Financing
286 ($1,650)
Effects of FX Fluctuations on Cash
1
Cash and Cash equiv at beginning
5,674
Net Increase in cash and cash equiv.
(897)
Cash and Cash equiv at end
(1,126) (420) ($2,915) 0 4,777 (1,728)
(1,095)
(1,069)
(1,183)
(1,181)
(1,178)
(1,176)
(1,174)
(1,171)
(1,169)
(1,166)
44 ($4,607)
($4,962)
($2,183)
($2,181)
($2,178)
($2,176)
($2,174)
($2,171)
($2,169)
($2,166)
(6) 3,049 94
0
(4,479)
(4,409)
(136)
(90)
($5,498)
($14,134)
(9)
(5)
0
0
0
0
(4,718) 0 ($8,718) 0
(4,680) 0 ($8,680) 0
3,143
1,603
2,691
3,204
4,284
5,321
6,229
7,322
8,833
8,478
5,674
1,603
5,321
(1,540)
1,089
513
1,080
1,037
908
1,093
1,511
1,495
(2,804)
(4,071)
3,718
5,007
4,777
3,049
3,143
1,603
2,691
3,204
4,284
5,321
6,229
7,322
8,833
10,328
5,674
1,603
5,321
10,328
14,269
14,262
12,451
12,451
12,451
12,451
12,451
12,451
12,451
12,451
12,451
12,451
14,413
12,451
12,451
12,451
Total Cash and Cash eqv plus MS at end
$19,046
$17,311
$15,594
$14,054
$15,142
$15,655
$16,735
$17,772
$18,680
$19,773
$21,284
$22,779
$20,087
$14,054
$17,772
$22,779
Check
$19,046
$17,311
$15,594
$14,054
$15,142
$15,655
$16,735
$17,772
$18,680
$19,773
$21,284
$22,779
$20,087
$14,054
$17,772
$22,779
Marketable Securities
Cash Flow from Operations Capex Free Cash Flow
3,501
5,453
5,693
5,834
5,772
5,194
5,758
5,713
5,581
5,764
6,180
6,162
20,776
20,481
22,437
23,687
(2,689)
(2,828)
(2,445)
(2,143)
(2,500)
(2,500)
(2,500)
(2,500)
(2,500)
(2,500)
(2,500)
(2,500)
(10,747)
(10,105)
(10,000)
(10,000)
$812
$2,625
$3,248
$3,691
$3,272
$2,694
$3,258
$3,213
$3,081
$3,264
$3,680
$3,662
$10,029
$10,376
$12,437
$13,687
Source: Company Reports & Barclays Research
16 January 2015
8
19
Barclays | Intel Corp.
ANALYST(S) CERTIFICATION(S): I, Blayne Curtis, hereby certify (1) that the views expressed in this research report accurately reflect my personal views about any or all of the subject securities or issuers referred to in this research report and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report. The POINT® Quantitative Equity Scores (POINT Scores) referenced herein are produced by the firm’s POINT quantitative model and Barclays hereby certifies that (1) the views expressed in this research report accurately reflect the firm's POINT Scores model and (2) no part of the firm's compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this research report.
IMPORTANT DISCLOSURES CONTINUED Barclays Research is a part of the Corporate and Investment Banking division of Barclays Bank PLC and its affiliates (collectively and each individually, "Barclays"). For current important disclosures regarding companies that are the subject of this research report, please send a written request to: Barclays Research Compliance, 745 Seventh Avenue, 14th Floor, New York, NY 10019 or refer to http://publicresearch.barclays.com or call 212-526-1072. The analysts responsible for preparing this research report have received compensation based upon various factors including the firm's total revenues, a portion of which is generated by investment banking activities. Analysts regularly conduct site visits to view the material operations of covered companies, but Barclays policy prohibits them from accepting payment or reimbursement by any covered company of their travel expenses for such visits. In order to access Barclays Statement regarding Research Dissemination Policies and Procedures, please refer to https://live.barcap.com/publiccp/RSR/nyfipubs/disclaimer/disclaimer-research-dissemination.html. In order to access Barclays Research Conflict Management Policy Statement, please refer to: https://live.barcap.com/publiccp/RSR/nyfipubs/disclaimer/disclaimer-conflictmanagement.html. The Corporate and Investment Banking division of Barclays produces a variety of research products including, but not limited to, fundamental analysis, equity-linked analysis, quantitative analysis, and trade ideas. Recommendations contained in one type of research product may differ from recommendations contained in other types of research products, whether as a result of differing time horizons, methodologies, or otherwise. Primary Stocks (Ticker, Date, Price) Intel Corp. (INTC, 15-Jan-2015, USD 36.19), Equal Weight/Neutral, C/J/K/M/N
Disclosure Legend: A: Barclays Bank PLC and/or an affiliate has been lead manager or co-lead manager of a publicly disclosed offer of securities of the issuer in the previous 12 months. B: An employee of Barclays Bank PLC and/or an affiliate is a director of this issuer. C: Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in equity securities issued by this issuer or one of its affiliates. D: Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from this issuer in the past 12 months. E: Barclays Bank PLC and/or an affiliate expects to receive or intends to seek compensation for investment banking services from this issuer within the next 3 months. F: Barclays Bank PLC and/or an affiliate beneficially owned 1% or more of a class of equity securities of the issuer as of the end of the month prior to the research report's issuance. G: One of the analysts on the coverage team (or a member of his or her household) owns shares of the common stock of this issuer. H: This issuer beneficially owns 5% or more of any class of common equity securities of Barclays Bank PLC. I: Barclays Bank PLC and/or an affiliate has a significant financial interest in the securities of this issuer. J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of this issuer. K: Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from this issuer within the past 12 months. L: This issuer is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate. M: This issuer is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC and/or an affiliate. N: This issuer is, or during the past 12 months has been, a non-investment banking client (non-securities related services) of Barclays Bank PLC and/or an affiliate. O: Barclays Capital Inc., through Barclays Market Makers, is a Designated Market Maker in this issuer's stock, which is listed on the New York Stock Exchange. At any given time, its associated Designated Market Maker may have "long" or "short" inventory position in the stock; and its associated Designated Market Maker may be on the opposite side of orders executed on the floor of the New York Stock Exchange in the stock. P: A partner, director or officer of Barclays Capital Canada Inc. has, during the preceding 12 months, provided services to the subject company for remuneration, other than normal course investment advisory or trade execution services. Q: Barclays Bank PLC and/or an affiliate is a Corporate Broker to this issuer. R: Barclays Capital Canada Inc. and/or an affiliate has received compensation for investment banking services from this issuer in the past 12 16 January 2015
9
20
Barclays | Intel Corp.
IMPORTANT DISCLOSURES CONTINUED months. S: Barclays Capital Canada Inc. is a market-maker in an equity or equity related security issued by this issuer. T: Barclays Bank PLC and/or an affiliate is providing equity advisory services to this issuer.
Risk Disclosure(s) Master limited partnerships (MLPs) are pass-through entities structured as publicly listed partnerships. For tax purposes, distributions to MLP unit holders may be treated as a return of principal. Investors should consult their own tax advisors before investing in MLP units. Guide to the Barclays Fundamental Equity Research Rating System: Our coverage analysts use a relative rating system in which they rate stocks as Overweight, Equal Weight or Underweight (see definitions below) relative to other companies covered by the analyst or a team of analysts that are deemed to be in the same industry (the "industry coverage universe"). In addition to the stock rating, we provide industry views which rate the outlook for the industry coverage universe as Positive, Neutral or Negative (see definitions below). A rating system using terms such as buy, hold and sell is not the equivalent of our rating system. Investors should carefully read the entire research report including the definitions of all ratings and not infer its contents from ratings alone. Stock Rating Overweight - The stock is expected to outperform the unweighted expected total return of the industry coverage universe over a 12-month investment horizon. Equal Weight - The stock is expected to perform in line with the unweighted expected total return of the industry coverage universe over a 12month investment horizon. Underweight - The stock is expected to underperform the unweighted expected total return of the industry coverage universe over a 12-month investment horizon. Rating Suspended - The rating and target price have been suspended temporarily due to market events that made coverage impracticable or to comply with applicable regulations and/or firm policies in certain circumstances including where the Corporate and Investment Banking Division of Barclays is acting in an advisory capacity in a merger or strategic transaction involving the company. Industry View Positive - industry coverage universe fundamentals/valuations are improving. Neutral - industry coverage universe fundamentals/valuations are steady, neither improving nor deteriorating. Negative - industry coverage universe fundamentals/valuations are deteriorating. Below is the list of companies that constitute the "industry coverage universe": U.S. Semiconductors Altera Corp. (ALTR)
Analog Devices (ADI)
Atmel Corp. (ATML)
Avago Technologies Ltd. (AVGO)
Broadcom Corp. (BRCM)
Cavium Inc. (CAVM)
Cirrus Logic Inc. (CRUS)
Cypress Semiconductor Corp. (CY)
Entropic Communications Inc. (ENTR)
Freescale Semiconductor Holdings (FSL)
Integrated Device Technology, Inc. (IDTI)
Intel Corp. (INTC)
M/A-COM Technology Solutions Holdings, Inc. (MTSI)
MagnaChip Semiconductor (MX)
Marvell Technology Group, Ltd. (MRVL)
Maxim Integrated Products (MXIM)
NVIDIA Corp. (NVDA)
NXP Semiconductors NV (NXPI)
Qorvo Inc. (QRVO)
QUALCOMM, Inc. (QCOM)
Silicon Laboratories, Inc. (SLAB)
Skyworks Solutions, Inc. (SWKS)
Spansion Inc. (CODE)
Texas Instruments, Inc. (TXN)
Xilinx, Inc. (XLNX) Distribution of Ratings: Barclays Equity Research has 2680 companies under coverage. 44% have been assigned an Overweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Buy rating; 55% of companies with this rating are investment banking clients of the Firm. 40% have been assigned an Equal Weight rating which, for purposes of mandatory regulatory disclosures, is classified as a Hold rating; 46% of companies with this rating are investment banking clients of the Firm. 14% have been assigned an Underweight rating which, for purposes of mandatory regulatory disclosures, is classified as a Sell rating; 42% of companies with this rating are investment banking clients of the Firm. Guide to the Barclays Research Price Target: Each analyst has a single price target on the stocks that they cover. The price target represents that analyst's expectation of where the stock will trade in the next 12 months. Upside/downside scenarios, where provided, represent potential upside/potential downside to each analyst's price target over the same 12-month period.
16 January 2015
10
21
Barclays | Intel Corp.
IMPORTANT DISCLOSURES CONTINUED Guide to the POINT® Quantitative Equity Scores: The POINT Quantitative Equity Scores (POINT Scores) are based on consensus historical data and are independent of the Barclays fundamental analysts’ views. Each score is composed of a number of standard industry metrics. A high/low Value score indicates attractive/unattractive valuation. Measures of value include P/E, EV/EBITDA and Free Cash Flow. A high/low Quality score indicates financial statement strength/weakness. Measures of quality include ROIC and corporate default probability. A high/low Sentiment score indicates bullish/bearish market sentiment. Measures of sentiment include price momentum and earnings revisions. These scores are valid as of the date of this report. To view the latest scores, which are updated monthly, click here. For a more detailed description of the underlying methodology for each score, please click here. Barclays offices involved in the production of equity research: London Barclays Bank PLC (Barclays, London) New York Barclays Capital Inc. (BCI, New York) Tokyo Barclays Securities Japan Limited (BSJL, Tokyo) São Paulo Banco Barclays S.A. (BBSA, São Paulo) Hong Kong Barclays Bank PLC, Hong Kong branch (Barclays Bank, Hong Kong) Toronto Barclays Capital Canada Inc. (BCCI, Toronto) Johannesburg Absa Bank Limited (Absa, Johannesburg) Mexico City Barclays Bank Mexico, S.A. (BBMX, Mexico City) Taiwan Barclays Capital Securities Taiwan Limited (BCSTW, Taiwan) Seoul Barclays Capital Securities Limited (BCSL, Seoul) Mumbai Barclays Securities (India) Private Limited (BSIPL, Mumbai) Singapore Barclays Bank PLC, Singapore branch (Barclays Bank, Singapore)
16 January 2015
11
22
Barclays | Intel Corp.
IMPORTANT DISCLOSURES CONTINUED
Intel Corp. (INTC)
Stock Rating
USD 36.19 (15-Jan-2015)
EQUAL WEIGHT
Rating and Price Target Chart - USD (as of 15-Jan-2015)
Currency=USD Date
Industry View NEUTRAL
Closing Price
Rating *
Adjusted Price Target
38
15-Oct-2014
31.28
32.00
36
16-Jul-2014
34.65
30.00
15-Jul-2014
31.71
28.00
13-Jun-2014
29.87
26.00
32
15-Jan-2014
26.67
24.00
30
17-Dec-2013
24.66
22.00
28
03-Jan-2013
21.32
20.00
10-Oct-2012
21.76
22.00
07-Sep-2012
24.19
24.00
10-Jul-2012
25.56
26.00
34
26 24 22
11-May-2012
27.63
30.00
20
12-Apr-2012
28.48
28.00
20-Jan-2012
26.38
26.00
18 Jul- 2012
Jan- 2013
Jul- 2013
Closing Price
Jan- 2014 Target Price
Jul- 2014
Jan- 2015
Source: Thomson Reuters, Barclays Research Historical stock prices and price targets may have been adjusted for stock splits and dividends. *The rating for this security remained Equal Weight during the relevant period.
Source: IDC, Barclays Research
Link to Barclays Live for interactive charting C: Barclays Bank PLC and/or an affiliate is a market-maker and/or liquidity provider in equity securities issued by Intel Corp. or one of its affiliates. J: Barclays Bank PLC and/or an affiliate trades regularly in the securities of Intel Corp.. K: Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from Intel Corp. within the past 12 months. M: Intel Corp. is, or during the past 12 months has been, a non-investment banking client (securities related services) of Barclays Bank PLC and/or an affiliate. N: Intel Corp. is, or during the past 12 months has been, a non-investment banking client (non-securities related services) of Barclays Bank PLC and/or an affiliate. Valuation Methodology: Our price target of $32 is based upon 12x our CY16 EPS of $2.64. Risks which May Impede the Achievement of the Barclays Research Price Target: Intel is heavily dependent to PC sales. If the number of PCs sold declines, Intel's processor opportunity will directly be affected by the units. Intel's average selling prices are also impacted by supply and demand conditions of PCs. Although the company typically reduces processor prices once a quarter, the company may increase the severity of the price cut to drive sell through demand. Also the competitive position of AMD products and any market share gains could adversely affect Intel. Intel's Architecture group, which includes the processor revenue, generates about 85% of total revenue and over 100% of operating profit.
16 January 2015
12
23
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24
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25
US08-000001
26
North America Equity Research 16 January 2015
Overweight
Intel
INTC, INTC US
4Q14 Positive EPS Surprise on Strong Datacenter and IoT; 1Q15 Guidance Reflects Normal Seasonality; Reiterate OW Intel reported 4Q14 EPS results above ours and consensus estimates due to higher than expected gross margins as all segments (PC, Datacenter, and IoT) outgrew their respective markets. The company’s revenue guidance for 1Q15 was slightly below consensus estimates but reflected a normal (last 3 years) 7% sequential decrease in Q1 revenues. By business unit, Intel’s PC segment experienced better than market performance with overall shipments up 6% Y/Y despite a slight inventory burn in the low-end notebook PC segment of the market. The data center group (up 25% Y/Y in Q4) and internet of things (IoT) group (up 10% Y/Y in Q4) remained strong. The data center group grew 11% sequentially due to a solid Grantley refresh cycle, continued build-out of cloud, and continued strong demand in high performance computing and data analytics. The IoT group grew 12% Q/Q due to continued penetration into the manufacturing and automotives markets. For the full year, management continues to expect flattish PC unit growth augmented by continued double digits growth in its Datacenter and IoT segments. We are increasing our 2015 EPS estimate to $2.45 from our prior estimate of $2.42 (incl.options). We raise our Dec-15 price target to $42 and reiterate our OW rating. Solid 4Q14 results. Intel reported 4Q14 revenues of $14.72B (up 1.1% Q/Q, 6.4% Y/Y), in-line with ours and consensus estimates of $14.72B. The company’s Q4 reported EPS (incl. options) of $0.74 was above our estimate of $0.65 and the consensus estimate of $0.66, due to better-than-expected gross margins of 65.4%, above consensus estimates of 63.98% driven by higher ASPs and a richer mix of Datacenter revenues (higher gross margins). By segments, Intel’s data center group and IoT group grew the most year-over-year and experienced positive sequential growth. For 4Q14, the data center group was up 11% Q/Q and 25% Y/Y, due to continued build-out of cloud, strong demand for high performance computing, and a solid Grantley refresh cycle. The IoT group was up 12% Q/Q and 10% Y/Y due to continued penetration into the manufacturing and automotives market. Intel’s other segments were flat or down sequentially. Intel’s PC unit was down 3% due to a slight inventory burn in the low-end PC segment, but up 6% Y/Y on units (and outperforming the overall market) driven by strong notebook shipment sales.
Intel Corp (INTC;INTC US) FYE Dec EPS (incl stk comp) ($) Q1 (Mar) Q2 (Jun) Q3 (Sep) Q4 (Dec) FY Bloomberg EPS FY ($)
2013A 0.40 0.39 0.49 0.51 1.80 1.96
2014A 0.38 0.55 0.66 0.74 2.32 2.33
2015E
(Prev)
0.53 0.59 0.65 0.65 2.42 -
2015E
(Curr)
0.48 0.60 0.68 0.68 2.45 2.42
Price: $36.19
▲ Price Target: $42.00 Previous: $39.00
Semiconductors,Semiconductor Cap Equipment & Tech Hardware Harlan Sur
AC
(1-415) 315-6700
[email protected] Bloomberg JPMA SUR
Bill Peterson (1-415) 315-6766
[email protected] J.P. Morgan Securities LLC Price Performance 38 34 $ 30 26 22 Jan-14
Apr-14
Jul-14
Oct-14
Jan-15
INTC share price ($) S&P500 (rebased)
Abs Rel
YTD -0.3% 2.9%
1m 0.8% 0.6%
Company Data Price ($) Date Of Price 52-week Range ($) Market Cap ($ mn) Fiscal Year End Shares O/S (mn) Price Target ($) Price Target End Date
3m 15.7% 8.7%
12m 35.7% 27.9%
36.19 15 Jan 15 37.90-23.50 185,401.40 Dec 5,123 42.00 31-Dec-15
Source: Company data, Bloomberg, J.P. Morgan estimates.
See page 10 for analyst certification and important disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. www.jpmorganmarkets.com
27
Harlan Sur (1-415) 315-6700
[email protected]
North America Equity Research 16 January 2015
1Q15 revenue guidance below consensus but reflects normal seasonality of the last three years. Management guided 1Q15 revenue down 7% Q/Q to $13.7 B at the midpoint, above our prior estimate of $13.65B, but below the consensus estimate of $13.79B. We would note that over the past three years (2012-2014) Intel’s Q1 revenues have declined an average of 7% Q/Q. Intel expects 1Q15 gross margins to decrease by about 540 bps Q/Q down to 60%, below our prior estimate of 62.5% (and consensus estimates of 61%) on higher 14nm platform unit costs and lower volumes. Despite the higher 14nm product costs, we believe that Intel is on-track to deliver on its cost-curve targets of achieving cost points similar to its 22nm technology heading into the Q3 of this year. Additionally, management feels confident that computing inventories (channel and OEM) exiting Q4 are at normal inventory levels. Full year outlook for 2015 reiterated, remains mostly unchanged. Other than a 5% lower forecast for capex in 2015, Management’s outlook for the full year of 2015 remained mostly unchanged from the Investor day in November (mid-single digits top-line growth, 62% gross margins, and $20B in opex spend). Capex forecast for 2015 was lowered by 5% versus prior expectations due to the manufacturing organization’s ability to start factories for more quickly by 2-3 months for the 14 nm. For 2015, the company continues to expect strong growth and favorable market conditions for the data center group and IoT group (ie – continued double-digits growth) and continued flattish growth in PC unit shipments. In addition, Intel will continue to ramp its Broadwell (14nm) Core M, which has captured design wins for 2-in-1’s as well as Chromebooks, Ultrabooks, and many PCs. The company’s 14nm Core products (i3,i5,i7) is on track for a full roll-out during the upcoming spring refresh cycle. Intel also expects to ramp SoFIA family throughout 2015. Adjusting estimates higher on higher confidence level in DCG and IoT growth prospects, combined with a flattish PC market outlook. Given our increasing confidence level about the team’s ability to drive double-digits growth in DCG and IoT segments, combined with a flattish PC market outlook, we are adjusting our EPS estimates to $2.45 from $2.42 in C15. Our new Dec-15 price target of $42 assumes that INTC trades at 17x our C15 EPS estimate of $2.45 or a slight premium to our semi group multiple given its premium margin structure and capital return program. We remain our OW rating on INTC on stable PC fundamentals, continued growth in datacenter, margin expansion potential, and rising payout ratios.
2
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Harlan Sur (1-415) 315-6700
[email protected]
North America Equity Research 16 January 2015
Summary Yesterday after the close, Intel reported 4Q14 results above our / consensus estimates and 1Q15 guidance in-line with historical seasonality. Gross margins were better than expected in Q4 and Intel’s outlook for 1Q, while following typical seasonality, highlights continued PC client stability, and datacenter/IoT strength. We are increasing our 2015 EPS estimate to $2.45 from our prior estimate of $2.42 (incl. options). We are also increasing our Dec-15 price target to $42 and reiterate our OW rating. Table 1: Intel 4Q14 Earnings Summary and 1Q15 Outlook $ in billions, except per-share data
Consensus Revenue ($B) Q/Q Change Gross Margin Op Margin EPS (inc. SBC)
$14.7 64.0% $0.66
4Q14 JPM Est
Actual
Delta
$14.7 1.0% 64.0% 30.1% $0.65
$14.7 1.1% 65.4% 30.2% $0.74
$0.0 0.1% 1.4% 0.2% $0.09
1Q15E Consensus Guidance $13.8 61.1%
$13.7 +/- $0.5 -6.8% 60% +/- 2%
Source: Company reports, Bloomberg and J.P. Morgan estimates.
Table 2: Intel Market Segment Summary - 4Q14 $ in millions 4Q14 Segment
Q/Q
Y/Y
PC Client
$8,871
dow n 3%
up 3%
% of Total Op Margin Operating Income 60.3%
46.4%
$4,120
Data Center
$4,091
up 11%
up 25%
27.8%
46.8%
$1,915
Internet of Things
$591
up 12%
up 10%
4.0%
25.9%
$153
Mobile & Comm
($6)
dow n from $1M in Q3
0.0%
17383.3%
($1,043)
S/W & services
$557
flat
dow n 6%
3.8%
5.2%
$29
Other
$617
up 7%
up 23%
4.2%
-102.8%
($634)
Total
$14,721
100.0%
30.8%
$4,540
Source: Source: Company reports and J.P. Morgan estimates.
Balance Sheet and Cash Flow items Intel generated over $5.8 billion in cash from operations in 4Q with capital spending of about $2.14 billion for the quarter. During Q4, Intel paid $1.1 billion in dividends and used $4.0 billion to repurchase approximately 115 million shares. The company also announced an increase in cash dividend to $0.96 per share on an annual-basis. Total cash and equivalents was approximately $14.1 billion at the end of Q4, down about $6 billion Y/Y. Net cash balance at the end of 4Q14 was approximately $340 million, down about $5.5 billion Y/Y.
3
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Harlan Sur (1-415) 315-6700
[email protected]
North America Equity Research 16 January 2015
Investment Thesis, Valuation and Risks Intel (Overweight; Price Target: $42.00) Investment Thesis Our Overweight thesis on Intel is based on upside from the PC and Data Center segments, superior capital allocation, and operating margin leverage. Although INTC stock was up more than 40% in 2014, we believe if PC demand remains flattish (+/- a few %) and Datacenter and IoT segments continue to grow at doubledigits growth rate, this should drive further upside to consensus estimates and the stock. We also expect Intel to benefit from the launch of its new Grantley server platform in September as datacenter/enterprise fundamentals remain positive. We believe capital allocation is another strong point for Intel as the company has averaged a roughly 108% payout ratio since 2009, well above its peer group average of 80% over that same span. INTC stock pays a roughly 3% dividend, and the company repurchased roughly $4B in stock in 3Q14. Lastly, we expect Intel's C15 operating margins to expand roughly 130 basis points YoY to 28.8% driven by roughly 3% revenue growth and flattish operating expenses. Valuation Given our increasing confidence level about the team’s ability to drive double-digits growth in DCG and IoT segments, combined with a flattish PC market outlook, we are adjusting our EPS estimates to $2.45 from $2.42 in C15. Our new Dec-15 price target of $42 assumes that INTC trades at 17x our C15 EPS estimate of $2.45 or a slight premium to our semi group multiple given the company’s premium gross/operating margin profile and capital return. We remain OW INTC on stable PC fundamentals, continued growth in datacenter, margin expansion potential, and rising payout ratios. Risks to Rating and Price Target Intel derives roughly 60% of revenue from the consumer PC segment. If consumer PC demand is stronger/weaker than expected, this could lead to an increase/decrease in Intel’s microprocessor shipments, which could result in an upward/downward revision of our revenue and EPS estimates for Intel. Also, Intel generates roughly 15% of sales from HP, 15% of sales from Dell, and 12% of sales at Lenovo. Therefore, any major share gains/losses or shift in order patterns at HP, Dell, or Lenovo could impact Intel’s results.
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North America Equity Research 16 January 2015
Harlan Sur (1-415) 315-6700
[email protected]
Appendix I – Valuation and Comp Table Table 3: Semiconductor Valuation and Comp Table CALENDAR YEAR SALES/EARNINGS ANALYSIS Consensus
JPM
1/15/2015 Market
1/15/15
Price
%
Rating
Cap
Price
Target
Upside
$42.00 $21.00 NA
16% 7% NA
$2.54 $1.34 $0.08
$40.00 $112.00
37% 43%
$54.00 $47.00 $38.00 $19.00 $55.00 $110.00
Harlan Sur, Lead Coverage phone: 415-315-6700, email:
[email protected] PC Semiconductors INTC OW $178,779 $36.19 NVDA N $10,941 $19.60 AMD N $1,978 $2.52 Memory MU OW $35,014 $29.30 SNDK N $18,899 $78.52 Enterprise/Networking/Datacenter Semiconductors BRCM OW $24,857 $40.95 XLNX N $11,319 $41.04 ALTR N $10,540 $33.98 MRVL OW $7,981 $15.35 CAVM OW $3,282 $59.10 AVGO N $27,559 $101.32 MLNX N Analog/Microcontrollers TXN OW ADI N
Non-GAAP EPS C14E C15E
P/E
Revenue C14E C15E
C14E
C15E
$2.68 $1.40 $0.22
14.2 14.6 31.5
13.5 14.0 11.5
$55,849 $4,631 $5,512
$3.23 $5.74
$3.72 $6.57
9.1 13.7
7.9 11.9
32% 15% 12% 24% -7% 9%
$2.96 $2.37 $1.82 $1.15 $1.46 $5.41
$3.60 $2.59 $2.18 $1.20 $1.93 $6.23
13.8 17.3 18.7 13.4 40.4 nm
11.4 15.8 15.6 12.8 30.7 16.3
P/S
EV/Sales C14E C15E
Non-GAAP EPS C14E C15E
3.1 2.3 0.4
3.0 1.7 0.6
2.9 1.6 0.6
$2.30 $1.32 $0.07
2.1 2.8
1.8 2.5
1.9 2.1
1.7 1.9
$8,685 $2,690 $2,108 $3,786 $453 $5,862
3.0 4.6 5.5 2.1 8.8 6.6
2.9 4.2 5.0 2.1 7.2 4.7
2.4 4.0 3.9 1.5 8.2 7.1
2.4 3.7 3.5 1.4 6.8 5.1
C14E
C15E
$57,750 $4,861 $5,525
3.2 2.4 0.4
$16,892 $6,718
$19,250 $7,513
$8,410 $2,452 $1,932 $3,740 $373 $4,199
Consensus Sales
Consensus P/E
Consensus P/S
C14E
C15E
C14E
C15E
C14E
C15E
$2.42 $1.38 $0.11
$55,870 $4,614 $5,510
$58,295 $4,857 $5,156
15.7 14.9 36.0
15.0 14.2 23.1
3.2 2.4 0.4
3.1 2.3 0.4
$3.41 $5.58
$3.77 $6.10
$16,928 $6,635
$18,676 $7,218
8.6 14.1
7.8 12.9
2.1 2.8
1.9 2.6
$2.94 $2.42 $1.51 $1.16 $1.46 $5.59
$3.33 $2.58 $1.79 $1.10 $1.84 $7.35
$8,397 $2,451 $1,933 $3,753 $373 $4,926
$8,443 $2,610 $2,064 $3,796 $449 $6,511
13.9 19.3 25.0 13.3 nm 18.1
12.3 15.9 19.0 13.9 nm 13.8
3.0 4.6 5.5 2.1 8.8 5.6
2.9 4.3 5.1 2.1 7.3 4.2
$2,077
$44.92
$50.00
11%
$1.10
$2.30
41.0
19.6
$457
$611
4.5
3.4
$1.07
$2.02
$457
$582
nm
22.3
4.5
3.6
$56,261 $16,708
$52.39 $52.73
$56.00 $58.00
7% 10%
$2.72 $2.60
$3.10 $3.04
19.3 20.3
16.9 17.3
$13,036 $2,997
$13,559 $3,270
4.3 5.6
4.1 5.1
4.4 4.8
4.2 4.4
$2.65 $2.47
$2.97 $2.85
$13,044 $2,948
$13,618 $3,283
27.4 24.2
17.6 18.5
4.3 5.7
4.1 5.1
NXPI N $18,888 $76.61 MCHP N $10,016 $44.46 MXIM OW $9,172 $31.69 FSL N $7,815 $25.29 LLTC UW $10,967 $44.84 Diversified/Consumer/Standard Components/Other ONNN N $4,307 $9.68
$75.00 $50.00 $40.00 $21.00 $40.00
-2% 12% 26% -17% -11%
$4.73 $2.55 $1.64 $1.46 $2.24
$5.60 $2.77 $1.69 $1.75 $2.20
16.2 17.4 19.3 17.4 20.0
13.7 16.1 18.8 14.4 20.4
$5,625 $2,091 $2,388 $4,631 $1,439
$6,295 $2,240 $2,380 $4,771 $1,520
3.4 4.8 3.8 1.7 7.6
3.0 4.5 3.9 1.6 7.2
3.8 4.3 3.6 2.7 6.7
3.4 4.0 3.6 2.6 6.3
$4.74 $2.61 $1.53 $1.44 $2.28
$5.50 $2.79 $1.62 $1.75 $2.39
$5,623 $2,093 $2,389 $4,633 $1,437
$6,193 $2,253 $2,399 $4,734 $1,535
16.2 28.0 23.3 17.5 25.2
13.9 15.9 19.6 14.5 18.8
3.4 4.8 3.8 1.7 7.6
3.0 4.4 3.8 1.7 7.1
$10.00
3%
$0.65
$0.92
15.0
10.5
$3,153
$3,566
1.4
1.2
1.6
1.4
$0.74
$0.92
$3,154
$3,527
26.9
10.5
1.4
1.2
MTSI OW $1,388 ADNC OW $82 VSH N $2,053 FCS N $1,902 IMI N $84 CY UW $2,273 Semiconductor Capital Equipment AMAT OW $28,830 LRCX OW $13,581 KLAC OW $11,139
$28.41 $4.05 $13.20 $15.92 $1.77 $13.82
$26.00 $9.00 $14.00 $14.00 $7.00 $9.50
-8% 122% 6% -12% 295% -31%
$0.58 ($1.11) $0.77 $0.62 ($0.34) $0.47
$0.71 ($1.25) $1.10 $0.98 ($0.15) $0.57
48.7 nm 17.1 25.7 nm 29.2
40.3 nm 12.0 16.2 nm 24.4
$448 $111 $2,503 $1,447 $31 $724
$489 $100 $2,615 $1,460 $30 $754
3.1 0.7 0.8 1.3 2.7 3.1
2.8 0.8 0.8 1.3 4.2 3.0
3.4 0.3 0.5 1.2 1.4 3.2
3.1 0.4 0.5 1.2 1.4 3.1
$1.35 ($1.10) $0.93 $0.67 ($0.31) $0.53
$1.72 ($1.54) $1.10 $0.90 ($0.27) $0.65
$444 $111 $2,505 $1,447 $47 $724
$512 $92 $2,618 $1,469 $46 $768
nm nm 16.3 nm nm nm
nm nm 12.0 17.8 nm 21.4
3.1 0.7 0.8 1.3 1.8 3.1
2.7 0.9 0.8 1.3 1.8 3.0
$23.33 $76.68 $66.87
$30.00 $84.00 $82.00
29% 10% 23%
$1.11 $4.60 $2.98
$1.38 $5.27 $4.55
21.1 16.7 22.4
16.9 14.6 14.7
$9,205 $4,859 $2,869
$10,210 $5,300 $3,330
3.1 2.8 3.9
2.8 2.6 3.3
3.0 2.2 3.1
2.7 2.0 2.6
$1.09 $4.60 $3.03
$1.35 $5.20 $4.03
$9,168 $4,862 $2,873
$10,036 $5,296 $3,178
21.5 16.7 22.1
17.3 14.8 16.6
3.1 2.8 3.9
2.9 2.6 3.5
44 124
49 138
16.3 31.0 14.8 16.1
15.7 22.0 13.4 14.5
$214 $1,175
$228 $1,231
4.1 3.3 3.1 1.7
3.6 2.8 2.9 1.6
19.1 21.6 14.8 16.1
15.2 16.8 13.4 14.5
3.8 3.3 3.1 1.7
3.6 2.8 2.9 1.6
Large Cap Semi Average Small-Mid Cap Semi Average SOX Index S&P500
657 1,993
Source: Company Reports, Bloomberg, J.P. Morgan Estimates
OW = Overweight, N = Neutral, UW = Underweight Note: EPS estimates exclude impact of stock compensation expense.
Source: Company reports, Bloomberg and J.P. Morgan estimates.
5
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North America Equity Research 16 January 2015
Harlan Sur (1-415) 315-6700
[email protected]
Appendix II – Financial Tables Table 4: INTC Income Statement $ in millions, except per share data
Intel Corporation Income Statement $M FY end: Dec. Total revenue % Change Y/Y % Change Q/Q
1Q13 2Q13 3Q13* 4Q13 F13 1Q14 2Q14 3Q14 4Q14 F14 1Q15E 2Q15E 3Q15E 4Q15E F15E 12,580 12,811 13,483 13,834 52,708 12,764 13,831 14,554 14,721 55,870 13,700 14,248 15,174 15,174 58,296 -1.2% 6.0% 4.3% -2.5% -5.1% 0.2% 2.6% 1.5% 8.0% 7.9% 6.4% 7.3% 3.0% 4.3% 3.1% -6.7% 1.8% 5.2% 2.6% -7.7% 8.4% 5.2% 1.1% -6.9% 4.0% 6.5% 0.0%
Cost of goods sold % Change Y/Y % Change Q/Q Gross margin
5,514 18.8% -2.6% 56.2%
5,341 8.0% -3.1% 58.3%
5,069 2.6% -5.1% 62.4%
5,263 21,187 4.9% -7.0% 3.8% 59.8% 62.0%
5,138 -6.8% -2.4% 59.7%
4,914 -8.0% -4.4% 64.5%
5,096 0.5% 3.7% 65.0%
5,100 20,248 -4.4% -3.1% 0.1% 63.8% 65.4%
5,480 6.7% 7.5% 60.0%
5,201 5.8% -5.1% 63.5%
5,463 7.2% 5.0% 64.0%
5,463 21,606 6.7% 7.1% 0.0% 62.9% 64.0%
SG&A % Total revenue R&D % Total revenue Amort of Goodwill/ In proc R&D % Total revenue
1,947 15.5% 2,527 20.1% 73 0.6%
2,165 16.9% 2,516 19.6% 70 0.5%
1,970 14.6% 2,742 20.3% 198 1.5%
8,088 2,006 15.3% 14.5% 2,826 10,611 20.1% 20.4% 531 190 1.0% 1.4%
2,037 16.0% 2,846 22.3% 210 1.6%
2,061 14.9% 2,859 20.7% 153 1.1%
1,979 13.6% 2,842 19.5% 97 0.7%
8,126 2,049 14.5% 13.9% 2,990 11,537 20.6% 20.3% 589 129 1.1% 0.9%
1,910 13.9% 2,990 21.8% 65 0.5%
1,910 13.4% 3,000 21.1% 65 0.5%
1,920 12.7% 3,100 20.4% 65 0.4%
7,660 1,920 13.1% 12.7% 3,100 12,190 20.9% 20.4% 260 65 0.4% 0.4%
Operating income % Total revenue Other income Pretax income % Total revenue Income tax Tax rate Net income % Total revenue
2,519 20.0% (76) 2,443 19.4% 398 16.3% 2,045 16.3%
2,719 21.2% (26) 2,693 21.0% 693 25.7% 2,000 15.6%
3,504 26.0% (32) 3,472 25.8% 974 28.1% 2,498 18.5%
3,549 12,291 23.3% 25.7% (132) 2 3,551 12,159 23.1% 25.7% 2,991 926 24.6% 26.1% 9,168 2,625 17.4% 19.0%
2,533 19.8% 160 2,693 21.1% 746 27.7% 1,947 15.3%
3,844 27.8% 78 3,922 28.4% 1,126 28.7% 2,796 20.2%
4,540 31.2% 10 4,550 31.3% 1,233 27.1% 3,317 22.8%
4,453 15,370 27.5% 30.2% 454 206 4,659 15,824 28.3% 31.6% 4,103 998 25.9% 21.4% 3,661 11,721 21.0% 24.9%
3,255 23.8% 0 3,255 23.8% 879 27.0% 2,376 17.3%
4,072 28.6% 0 4,072 28.6% 1,100 27.0% 2,973 20.9%
4,626 30.5% 0 4,626 30.5% 1,249 27.0% 3,377 22.3%
4,626 16,580 28.4% 30.5% 0 0 4,626 16,580 28.4% 30.5% 4,477 1,249 27.0% 27.0% 3,377 12,104 20.8% 22.3%
Avg. No. of Common Shares
5,080
5,106
5,100
5,103
5,097
5,117
5,123
5,045
4,940
5,056
4,940
4,940
4,940
4,940
4,940
EPS (Pro-forma) % Change Y/Y % Change Q/Q
$0.40 -24.0% -16.1%
$0.39 -27.5% -2.7%
$0.49 -15.6% 25.0%
$0.51 7.2% 5.0%
$1.80 -15.6%
$0.38 -5.5% -26.0%
$0.55 39.3% 43.4%
$0.66 34.2% 20.5%
$0.74 44.1% 12.7%
$2.32 28.9%
$0.48 26.4% -35.1%
$0.60 10.3% 25.1%
$0.68 4.0% 13.6%
$0.68 -7.7% 0.0%
$2.45 5.7%
EPS (Pro-forma, NO Options) % Change Y/Y % Change Q/Q
$0.46 -20.6% -14.7%
$0.45 -25.2% -2.6%
$0.54 -13.9% 20.8%
$0.57 4.8% 4.3%
$2.02 -14.1%
$0.44 -5.4% -23.0%
$0.60 34.8% 38.8%
$0.71 31.5% 17.9%
$0.80 40.8% 11.7%
$2.54 26.1%
$0.54 23.6% -32.4%
$0.66 8.9% 22.2%
$0.74 3.7% 12.3%
$0.74 -7.2% 0.0%
$2.68 5.2%
Source: Company reports and J.P. Morgan estimates.
6
32
North America Equity Research 16 January 2015
Harlan Sur (1-415) 315-6700
[email protected]
Table 5: INTC Balance Sheet $ in millions Intel Corporation Balance Sheet (in $ million) FY End: Dec. Assets Cash and ST investment Accounts receivable Inventories Raw material WIP Finished goods Deferred tax assets and other Total current assets PP&E, net Marketable equity s ecurities Other LT investments Amort. of Goodwill/ In process R&D Other Assets Total assets
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15E
2Q15E
3Q15E
4Q15E
17,073 3,536 4,358 451 2,129 1,778 3,710 28,677 28,418 4,698 1,309 9,756 10,225 83,083
17,350 3,474 4,542 487 2,220 1,835 3,682 29,048 29,345 5,361 1,642 10,005 10,260 85,661
19,146 3,719 4,533 505 2,259 1,769 3,952 31,350 30,346 6,514 1,583 10,467 10,291 90,551
20,087 3,582 4,172 458 1,998 1,716 4,243 32,084 31,428 6,221 1,473 10,513 10,639 92,358
19,046 3,505 3,763 463 1,803 1,497 4,240 30,554 32,502 6,085 1,765 10,617 10,382 91,905
17,311 3,489 3,943 503 2,071 1,369 4,263 29,006 33,115 6,044 2,184 10,621 10,823 91,793
15,594 3,647 4,115 496 2,292 1,327 4,607 27,963 33,135 6,514 2,153 10,556 10,773 91,094
14,054 4,427 4,273 462 2,375 1,436 4,976 27,730 33,238 7,097 2,023 10,861 11,007 91,956
14,459 4,427 4,300
15,283 4,427 4,500
16,706 4,427 4,500
18,130 4,427 4,500
4,535 27,721 34,088 7,097 2,023 10,861 10,717 92,507
4,629 28,839 34,938 7,097 2,023 10,861 10,427 94,185
4,775 30,409 35,788 7,097 2,023 10,861 10,137 96,315
4,859 31,915 36,638 7,097 2,023 10,861 9,847 98,381
Liabilities Short-term debt Accounts payable and accrued liabilities Deferred income Income taxes payable Total current liabilities Long-term debt Deferred tax liabilities Other long term liabilities Total liabilities Total stockholders' equity Total liability and stockholders' equity
88 9,809 1,901 0 11,798 13,143 3,427 3,521 31,889 51,194 83,083
263 9,155 1,971 0 11,389 13,150 3,709 3,573 31,821 53,840 85,661
350 11,432 2,093 0 13,875 13,157 4,384 3,683 35,099 55,452 90,551
281 11,191 2,096 0 13,568 13,165 4,397 2,972 34,102 58,256 92,358
36 11,301 2,171 0 13,508 13,172 4,302 2,868 33,850 58,055 91,905
14 10,066 2,171 0 12,251 13,180 4,187 2,928 32,546 59,247 91,793
79 11,551 2,189 0 13,819 13,188 4,029 3,070 34,106 56,988 91,094
1,604 12,210 2,205 0 16,019 12,107 3,775 3,278 35,179 56,777 91,956
1,604 12,210 2,205 0 16,019 12,107 3,775 3,278 35,179 57,328 92,507
1,604 12,210 2,205 0 16,019 12,107 3,775 3,278 35,179 59,006 94,185
1,604 12,210 2,205 0 16,019 12,107 3,775 3,278 35,179 61,136 96,315
1,604 12,210 2,205 0 16,019 12,107 3,775 3,278 35,179 63,202 98,381
Source: Company reports and J.P. Morgan estimates.
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Table 6: INTC Cash Flow Statement Cash Flow Statement (in $ million) FY End: Dec. Net income (GAAP) Depreciation Share based compensation Excess tax benefit from share based payment Amortization of acq-related intangibles and costs Purchased in-process R&D Tax benefit from employee stock plans Other adjustments Change in working capital Change in Receivables Changes in Inventory Changes in Trading assets Accounts Payable Accrued compensation and benefits Income taxes payable Other assets and liabilities Cash Flow from operations
(17.0) (1,370.0) 257.0 377.0 4,285.0
Changes in ST Investments Capital spending Acquisition, net of cash acquired Other Investing Activities Cash flow from investments Net borrowings Stock repurchase program Excess tax benefit from share based payment Proceeds of sales of shares to employees Dividends paid Other financing activities Cash flow from financing Cash at beginning of period Net change in cash and equivalents Cash at end of period Free Cash Flow Payout Ratio FCF/Share
1Q13 2,045.0 1,682.0 295.0
2Q13 2,000.0 1,712.0 292.0
3Q13 2,950.0 1,729.0 268.0
4Q13 2,625.0 1,667.0 263.0
1Q14 1,930.0 1,720.0 283.0
2Q14 2,796.0 1,880.0 303.0
3Q14 3,317.0 1,891.0 281.0
4Q14 3,661.0 1,889.0 281.0
1Q15E 2,376.2 1,900.0 285.0
2Q15E 2,972.9 1,900.0 280.0
3Q15E 3,377.3 1,900.0 275.0
4Q15E 3,377.3 1,900.0 275.0
290.0 0.0 0.0 0.0
290.0 0.0 0.0 0.0
290.0 0.0 0.0 0.0
290.0 0.0 0.0 0.0
0.0 0.0
0.0 0.0
382.0 0.0 (1.0) (30.0)
279.0 0.0 (37.0) (261.0)
292.0 0.0 (4.0) (489.0)
289.0 0.0 (7.0) (305.0)
287.0 0.0 (7.0) 64.0
290.0 0.0 (58.0) (142.0)
307.0 0.0 (44.0) (155.0)
279.0 0.0 0.0 0.0
293.0 372.0
75.0 (177.0)
(237.0) 10.0
140.0 358.0
78.0 405.0
11.0 (170.0)
(165.0) (176.0)
(780.0) (158.0)
128.0 565.0 577.0 (58.0) 5,731.0
(45.0) 377.0 146.0 530.0 6,038.0
(95.0) (1,229.0) 200.0 (135.0) 3,501.0
(8.0) 416.0 (112.0) 247.0 5,453.0
(189.0) 405.0 (278.0) 499.0 5,693.0
659.0 0.0 0.0 0.0 5,831.0
0.0 0.0 0.0 0.0 4,824.2
0.0 0.0 0.0 0.0 5,242.9
0.0 0.0 0.0 0.0 5,842.3
0.0 0.0 0.0 0.0 5,842.3
(3,171.0) (3,553.0) (2,174.0) (2,723.0) (98.0) (286.0) 126.0 1,050.0 (5,317.0) (5,512.0)
(2,519.0) (2,866.0) (498.0) 2,560.0 (3,323.0)
(2,316.0) (2,948.0) (43.0) 1,386.0 (3,921.0)
(2,335.0) (2,689.0) (108.0) 2,383.0 (2,749.0)
(2,369.0) (2,828.0) (29.0) 960.0 (4,266.0)
(587.0) (2,445.0) (56.0) 2,102.0 (986.0)
0.0 (2,143.0) (741.0) (47.0) (2,931.0)
0.0 (2,750.0) 0.0 0.0 (2,750.0)
0.0 (2,750.0) 0.0 0.0 (2,750.0)
0.0 (2,750.0) 0.0 0.0 (2,750.0)
0.0 (2,750.0) 0.0 0.0 (2,750.0)
(224.0) 175.0 (559.0) (796.0) 1.0 37.0 465.0 575.0 (1,114.0) (1,123.0) (307.0) 0.0 (1,738.0) (1,132.0)
87.0 (544.0) 4.0 268.0 (1,121.0) 0.0 (1,306.0)
(69.0) (541.0) 7.0 280.0 (1,121.0) 122.0 (1,322.0)
(245.0) (572.0) 7.0 479.0 (1,119.0) (200.0) (1,650.0)
(22.0) (2,352.0) 58.0 526.0 (1,126.0) 1.0 (2,915.0)
65.0 (4,182.0) 44.0 561.0 (1,095.0) 0.0 (4,607.0)
0.0 (4,000.0) 0.0 107.0 (1,069.0) 0.0 (4,962.0)
0.0 (1,000.0)
0.0 (1,000.0)
0.0 (1,000.0)
0.0 (1,000.0)
400.0 (1,069.0) 0.0 (1,669.0)
400.0 (1,069.0) 0.0 (1,669.0)
400.0 (1,069.0) 0.0 (1,669.0)
400.0 (1,069.0) 0.0 (1,669.0)
201.0 583.0 39.0 16.0 4,722.0
0.0 (27.0)
0.0 (200.0)
8,489.1 5,719.1 3,797.1 4,899.1 5,694.1 4,796.1 3,068.1 3,168.1 1,106.1 1,511.3 2,335.2 3,758.5 (2,770.0) (1,922.0) 1,102.0 795.0 (898.0) (1,728.0) 100.0 (2,062.0) 405.2 823.9 1,423.3 1,423.3 5,719.1 3,797.1 4,899.1 5,694.1 4,796.1 3,068.1 3,168.1 1,106.1 1,511.3 2,335.2 3,758.5 5,181.8 2,111.0 1,999.0 2,865.0 3,090.0 812.0 2,625.0 3,248.0 3,688.0 2,074.2 2,492.9 3,092.3 3,092.3 79.3% 96.0% 58.1% 53.8% 208.3% 132.5% 162.5% 137.4% 99.8% 83.0% 66.9% 66.9% $ 0.42 $ 0.39 $ 0.56 $ 0.61 $ 0.16 $ 0.51 $ 0.64 $ 0.75 $ 0.42 $ 0.50 $ 0.63 $ 0.63
Source: Company reports and J.P. Morgan estimates.
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North America Equity Research 16 January 2015
Intel: Summary of Financials Income Statement - Annual Revenues COGS Gross profit R&D SG&A Other operating expenses Operating income EBITDA Non-operating Income / (expense) Pretax income Income taxes Tax rate Minority interest/other Net income - recurring Diluted shares outstanding EPS (incl stock comp) EPS (excl stock comp)
FY13A 52,708 (21,187) 31,521 (10,611) (8,088) (531) 12,291 20,297 (132) 12,159 (2,991) 24.6% 9,168 5,097 1.80 2.02
FY14A 55,870 (20,248) 35,622 (11,537) (8,126) (589) 15,370 23,913 454 15,824 (4,103) 25.9% 11,721 5,056 2.32 2.54
Balance Sheet and Cash Flow Data Cash and cash equivalents Accounts receivable Inventories Current assets
FY13A 20,087 3,582 4,172 32,084
FY14A 14,054 4,427 4,273 27,730
PP&E Goodwill / intangibles Total assets
31,428 10,513 92,358
33,238 10,861 91,956
Short-term debt Current liabilities
281 13,568
1,604 16,019
13,165 34,102 58,256 20,776 (10,711) 8,006 10,065 1.97 (18,073) (5,498)
12,107 35,179 56,777 20,478 (10,105) 8,543 10,373 2.05 (10,932) (14,199)
Long-term debt Total liabilities Shareholders' equity Cash flow from operations Capex Depreciation & Amortization Free cash flow Free cash flow / share Cash flow from investing activities Cash flow from financing activities
FY15E FY16E Income Statement - Quarterly 58,296 - Revenues (21,606) - COGS 36,690 - Gross profit (12,190) - R&D (7,660) - SG&A (260) - Other operating expenses 16,580 - Operating income 25,340 - EBITDA 0 - Non-operating Income / (expense) 16,580 - Pretax income (4,477) - Income taxes 27.0% - Tax rate - Minority interest/other 12,104 - Net income - recurring 4,940 - Diluted shares outstanding 2.45 - EPS (incl stock comp) 2.68 - EPS (excl stock comp) Days of sales outstanding (DSOs) Days of inventory outstanding (DIOs) FY15E FY16E Ratio Analysis 18,130 - Sales growth 4,427 - EBITDA growth 4,500 - EPS growth 31,915 Gross margin 36,638 - EBITDA margin 10,861 - Net margin 98,381 Debt / EBITDA 1,604 - Net debt / Capital (book) 16,019 Return on capital employed (ROCE) 12,107 - Return on equity (ROE) 35,179 - Return on assets (ROA) 63,202 21,752 (11,000) 8,760 10,752 2.18 (11,000) (6,676) -
1Q14A 12,764 (5,138) 7,626 (2,846) (2,037) (210) 2,533 4,540 160 2,693 (746) 27.7% 1,947 5,117 0.38 0.44 25.2 72.1 FY13A (1.2%) (8.4%) (15.7%)
2Q14A 13,831 (4,914) 8,917 (2,859) (2,061) (153) 3,844 6,014 78 3,922 (1,126) 28.7% 2,796 5,123 0.55 0.60 23.0 78.8 FY14A 6.0% 17.8% 28.9%
3Q14A 14,554 (5,096) 9,458 (2,842) (1,979) (97) 4,540 6,738 10 4,550 (1,233) 27.1% 3,317 5,045 0.66 0.71 23.1 77.4 FY15E 4.3% 6.0% 5.7%
4Q14A 14,721 (5,100) 9,621 (2,990) (2,049) (129) 4,453 6,621 206 4,659 (998) 21.4% 3,661 4,940 0.74 0.80 24.8 75.5 FY16E -
59.8% 38.5% 19.5%
63.8% 42.8% 23.0%
62.9% 43.5% 22.7%
-
0.7 (9.7%)
0.6 (0.5%)
0.5 (6.0%)
-
13.6% 18.8% 11.6%
16.0% 22.4% 14.0%
16.4% 22.0% 13.9%
-
Source: Company reports and J.P. Morgan estimates. Note: $ in millions (except per-share data).Fiscal year ends Dec
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Harlan Sur (1-415) 315-6700
[email protected]
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Important Disclosures
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Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-related: Intel.
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Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from Intel.
Analyst Position: The following analysts (and/or their associates or household members) own a long position in the shares of Intel : Sang H Han Company-Specific Disclosures: Important disclosures, including price charts and credit opinion history tables, are available for compendium reports and all J.P. Morgan–covered companies by visiting https://jpmm.com/research/disclosures, calling 1-800-477-0406, or e-mailing
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[email protected].
Intel (INTC, INTC US) Price Chart
N $25 N $22
60 N $17
OW $25 OW $25 N $25
OW $29 OW $39
N $20
OW $37
48 OW Price($)
N
N $10
N $12
N $19 N $17 N $20.5OW $22 N $26N $19
N $18OW $30 OW $31
36
24
12
0 Oct 06
Apr 08
Oct 09
Apr 11
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends. Initiated coverage Apr 18, 2007.
Oct 12
Apr 14
Date
Rating Share Price Price Target ($) ($)
18-Apr-07
OW
21.35
-
04-Jan-08
N
24.67
-
04-Dec-08 N
12.77
10.00
17-Aug-09 N
18.77
12.00
27-Aug-09 N
19.47
17.00
14-Apr-10
N
23.52
19.00
27-Aug-10 N
18.37
17.00
14-Jan-11
N
21.29
20.50
20-Apr-11
OW
19.86
25.00
08-Sep-11 OW
20.08
22.00
19-Oct-11
OW
23.40
25.00
17-Jan-12
N
25.14
25.00
18-Apr-12
N
28.47
26.00
06-Jun-12
N
26.07
25.00
10-Sep-12 N
23.26
22.00
08-Oct-12
N
22.51
19.00
18-Jul-13
N
23.24
18.00
11-Oct-13
N
23.26
20.00
14-Jan-14
OW
26.51
29.00
17-Jan-14
OW
26.54
30.00
13-Jun-14
OW
27.96
31.00
08-Aug-14 OW
32.68
37.00
15-Oct-14
31.28
39.00
OW
10
36
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The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period. J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, if applicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not a recommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stock’s expected total return is compared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P. Morgan’s research website, www.jpmorganmarkets.com. Coverage Universe: Sur, Harlan: Advanced Micro Devices (AMD), Altera (ALTR), Analog Devices (ADI), Applied Materials (AMAT), Audience (ADNC), Avago Technologies (AVGO), Broadcom Corporation (BRCM), Cavium Inc (CAVM), Cypress Semiconductor (CY), Fairchild Semiconductor (FCS), Freescale Semiconductor (FSL), Intel (INTC), Intermolecular (IMI), KLA-Tencor (KLAC), Lam Research (LRCX), Linear Technology (LLTC), M/A-COM (MTSI), Marvell Technology Group (MRVL), Maxim Integrated Products (MXIM), Mellanox Technologies (MLNX), Microchip Technology (MCHP), Micron Technology (MU), NVIDIA Corporation (NVDA), NXP Semiconductors (NXPI), ON Semiconductor Corporation (ONNN), SanDisk Corp (SNDK), Seagate Technology (STX), Texas Instruments (TXN), Vishay Intertechnology (VSH), Western Digital (WDC), Xilinx (XLNX) J.P. Morgan Equity Research Ratings Distribution, as of January 1, 2015 J.P. Morgan Global Equity Research Coverage IB clients* JPMS Equity Research Coverage IB clients*
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Neutral (hold) 43% 49% 48% 67%
Underweight (sell) 12% 33% 7% 52%
*Percentage of investment banking clients in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table above.
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Harlan Sur (1-415) 315-6700
[email protected]
North America Equity Research 16 January 2015
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16 January 2015 Americas/United States Equity Research Semiconductor Devices
Intel Corp. (INTC) Rating Price (15 Jan 15, US$) Target price (US$) 52-week price range Market cap. (US$ m)
OUTPERFORM* 36.19 40.00¹ 37.67 - 23.52 174,978.65
*Stock ratings are relative to the coverage universe in each analyst's or each team's respective sector. ¹Target price is for 12 months.
Research Analysts John W. Pitzer 212 538 4610
[email protected] William Miller 212 325 6964
[email protected] Ryan Carver 212 325 1529
[email protected]
Share price performance 38
Daily Jan 16, 2014 - Jan 15, 2015, 1/16/14 = US$26.54
33 28 23 Jan-14
Apr-14 Price
Jul-14 Oct-14 Indexed S&P 500 INDEX
On 01/15/15 the S&P 500 INDEX closed at 1992.67
Quarterly EPS 2014A 2015E 2016E
Q1 0.38 0.48 0.60
Q2 0.55 0.54 0.63
Q3 0.66 0.66 0.73
Q4 0.97 0.71 0.78
COMMENT
Splitting the Uprights; GM Leverage Likely Blind-sides ■ Bottom Line. INTC reported DecQ Rev in-line/EPS above Street on better than expected GM; and guided MarQ Rev/EPS essentially in-line with CS, but modestly below Street. More Importantly, INTC maintained full year guide for both Rev, GM and Spending. We are maintaining our CY15 EPS at $2.40 and initiating CY16 EPS of $2.75 (Street at $2.39/$2.67 respectively). Our version of the two-minute drill: (1) GM is bottoming in C1Q seasonally and cyclically, (2) GM guide is conservative; 14nm should be 200-400 bps GM accretive (INTC’s merging PCCG/MCG to hide profits not loses), (3) 2015 Rev growth is more conservative than headline – an $800m decreases in MCG could add 100-150 bps to topline and implies CY15 guidance for PCCG is -5% y/y; PCCG was only -4.1% in CY13 when PC units declined ~10% y/y, (4) INTC under-shipped PCs in C4Q, forcing bears into prevent defense – it’s more likely investors are bull-rushed by DCG growth than sacked by negative PC datapoints, and (5) lack of EPS upside to kick-off CY15, after ~20% upside during 2014, is a fair-catch but ignores conservative rev and GM guidance, improving linearity, accelerating FCF, and relentless pursuit of cash return. While a victory formation is still too early, INTC continues to block-and-tackle extremely well and we continue to see long term earnings power of $4.00 plus (C4Q14 core-earnings annualized is $3.86). Reiterate OP and TP of $40.00 or 14.6x our CY16 EPS.
Financial and valuation metrics Year EPS - (Excl. ESO) (US$) EPS (CS adj.) (US$) Prev. EPS (CS adj.) (US$) P/E (CS adj., x) P/E rel. (CS adj., %) Revenue (US$ m) EBITDA (US$ m) Net debt (US$ m) OCFPS (US$) P/OCF (x) Number of shares (m) BV/share (Next Qtr., US$) Net debt (Next Qtr., US$ m) Dividend yield (%)
12/14A 2.31 2.31 — 15.6 84.1 55,870.0 23,890.0 -7,440 4.18 8.7 4,835.00 — — —
12/15E 12/16E 2.40 2.75 2.40 2.75 — — 15.1 13.2 87.0 82.0 58,800.0 60,600.0 25,317.0 28,538.3 -14,101 -23,429 4.58 4.94 7.9 7.3 Price/sales(x) P/BVPS (x) Dividend (current, US$)
12/17E — — — — — — — — — — 3.02 3.2 0.96
Source: Company data, Credit Suisse estimates.
DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do
business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS
BEYOND INFORMATION® Client-Driven Solutions, Insights, and Access
40
16 January 2015
■
C4Q14 Rev In-Line, EPS Above the Mid-point on Better GM/Mix, Lower Taxes and a Higher Gain on Equity Inv. INTC reported C4Q revenue of $14.72bn (+1.1% q/q), roughly in-line with CS / Street estimates at $14.70bn (+1.0% q/q) / $14.71bn (+1.1% q/q) and the Company’s guided range of $14.2bn to $15.2bn (-2.4% to +4.4% q/q) – the normal seasonal pattern is +6.4% q/q. PCCG revenue (60.3% of revenue) was -3.5% q/q (+3.0% y/y) as sequential declines in unit volumes (-5% q/q) were partially offset by ASP (+3% q/q) – on a y/y basis volumes / ASPs were +6% / -2% y/y. DCG revenue (27.8% of revenue) was +10.6% q/q (+25.4% y/y) as both volumes and ASPs increased sequentially (+5% / +7% q/q) and y/y (+15% / +10%). GM of 65.4% (+40 bps q/q) was above the guided range of 64.0% +/- a few % points, the puts and takes for the sequential GM expansion are as follows: higher platform ASPs (+200 bps), lower 14nm production costs (+150 bps), partially offset by higher platform unit costs from higher mix of 14nm (-150 bps), higher factory start-up costs (-50 bps), and lower platform volumes (-50 bps). Relative to C4Q guidance, the upside was driven by higher platform ASPs (+150 bps) and lower start-up costs/other non-production costs (+50 bps) partially offset by lower platform volumes (-50 bps). Core OpEx of $5.04bn (+4.5% q/q) came in above CS estimate and the Company's guidance of $4.90bn (+1.6% q/q) driven primarily by higher profit-dependent spending. In-line revenue, better GM partially offset by higher OpEx along with lower taxes from the reenactment of the US R&D tax credit (+$0.06) and higher than expected gains on equity investments (+$0.01) drove EPS of $0.74, above CS / Street at $0.65 / $0.66.
■
C1Q14 Guidance Below CS / Street Estimates. INTC guided C1Q15 revenue to a range of $13.2bn to $14.2bn (-10.3% q/q to -3.5% q/q) with the $13.7bn (-6.9% q/q) mid-point below CS / Street estimates at $13.80bn (-6.2% q/q) / $13.76bn (-6.5% q/q) – the declines are consistent with typical C1Q seasonality of -6.7% q/q. INTC guided C1Q15 GM to 60.0% +/- a couple of percentage points, down 540bps q/q at the midpoint versus C4Q14 GM of 65.4% but in-line with CS estimate of 60.0% – the puts and takes for the 540 bps decline are as follows: higher platform unit costs primarily on 14nm (-200 bps), higher factory startup costs (-150 bps), lower platform volumes (-100 bps) and higher platform write-offs from higher Skylake pre-qualification costs (-50 bps). INTC guided C1Q15 Core OpEx (R&D + MG&A) to ~$4.90bn (-2.8% q/q), absolutely above CS estimate of $4.80bn (-2.0% q/q). Modestly lower revenue and higher OpEx against in-line GM drove implied EPS to $0.44-$0.53, with the $0.48 midpoint below CS / Street estimates of $0.49 / $0.51.
■
Summary of Full Year 2015 Guidance. INTC offered the following guidance for 2015. (1) Revenue is expected to be up mid-single digits y/y in-line with guidance from the Company's Analyst Day in Nov. (2) GM is expected to be 62.0% +/- a few % points inline with guidance from the Company's Analyst Day in Nov – the puts and takes for the 170 bps y/y decline are as follows: higher platform unit costs primarily on 14nm (-200 bps) and higher factory startup costs (-100 bps) more than offsets lower production costs on 14nm (+50 bps) and a positive impact from Tablets (+50 bps). (3) Core OpEx is expected to be approx. $20.0bn +/- $400m in-line with guidance from the Company's Analyst Day in Nov – R&D and MG&A are expected to be approx. $12.2bn and $7.9bn, respectively. (4) Depreciation is expected to be approx. $8.1bn +/- $100m and (5) Amortization of acquisition-related intangibles is expected to be approx. $255m. (6) The full year tax rate is expected to be 27%. Finally, (7) CapEx is expected to be $10.0bn +/- $500m in 2015 – note this is down from the Company's guidance of $10.5bn +/- $500m during its Analyst Day in Nov.
■
Estimates and Valuation. We are modestly revising our 2015 revenue estimate to $58.80bn from $58.90bn, but maintain our EPS estimate at $2.40 – note that the Street was at $58.16bn/$2.39 before today's results. In addition, we are initiating our 2016 revenue/EPS estimates of $60.60bn/$2.75 – note that the Street was at $60.52/$2.67. Our TP of $40.00 represents 14.6x our 2016 EPS estimate of $2.75 but 6% above the MRA.
47%
37%
Neutral
FSR is between -6% and 6% of the MRA.
42%
32%
Sell
FSR is > 6% below the MRA.
11%
21%
Short-Term Rating
Definition
Coverage3
IB Services4
Buy
Stock price expected to rise within three months from the time the rating was assigned because of a specific catalyst or event.
less than 1%
less than 1%
Sell
Stock price expected to fall within three months from the time the rating was assigned because of a specific catalyst or event.
less than 1%
less than 1%
Source: UBS. Rating allocations are as of 31 December 2014. 1:Percentage of companies under coverage globally within the 12-month rating category. 2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within the past 12 months. 3:Percentage of companies under coverage globally within the Short-Term rating category. 4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided within the past 12 months. KEY DEFINITIONS: Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12 months. Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a forecast of, the equity risk premium). Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation. Short-Term Ratings reflect the expected nearterm (up to three months) performance of the stock and do not reflect any change in the fundamental view or investment case. Equity Price Targets have an investment horizon of 12 months. EXCEPTIONS AND SPECIAL CASES: UK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management, performance record, discount; Neutral: Neutral on factors such as structure, management, performance record, discount; Sell: Negative on factors such as structure, management, performance record, discount. Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment Review Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating. When such exceptions apply, they will be identified in the Company Disclosures table in the relevant research piece. Research analysts contributing to this report who are employed by any non-US affiliate of UBS Securities LLC are not registered/qualified as research analysts with the NASD and NYSE and therefore are not subject to the restrictions contained in the NASD and NYSE rules on communications with a subject company, public appearances, and trading securities held by a research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any, follows. UBS Securities LLC: Stephen Chin; Steven Chin.
Intel Corp. 16 January 2015
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Company Disclosures Company Name Intel Corp.6a, 6b, 7, 8, 16, 18a, 18b
Reuters
12-month rating
Short-term rating
Price
Price date
INTC.O
Buy
N/A
US$36.19
15 Jan 2015
Source: UBS. All prices as of local market close. Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing date 6a. 6b. 7. 8. 16. 18a. 18b.
This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment banking securities-related services are being, or have been, provided. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services are being, or have been, provided. Within the past 12 months, UBS Securities LLC has received compensation for products and services other than investment banking services from this company/entity. The equity analyst covering this company, a member of his or her team, or one of their household members has a long common stock position in this company. UBS Securities LLC makes a market in the securities and/or ADRs of this company. A U.S.-based global equity strategist, a member of his team, or one of their household members has a long common stock position in Intel. The U.S. equity strategist, a member of his team, or one of their household members has a long common stock position in Intel Corp.
Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report. Intel Corp. (US$) Stock Price (US$)
Price Target (US$) 40.0 30.0 20.0 10.0
01-Jan-15
01-Oct-14
01-Jul-14
01-Apr-14
01-Jan-14
01-Oct-13
01-Jul-13
01-Apr-13
01-Jan-13
01-Oct-12
01-Jul-12
01-Apr-12
01-Jan-12
01-Oct-11
01-Jul-11
01-Apr-11
01-Jan-11
01-Oct-10
01-Jul-10
01-Apr-10
01-Jan-10
0.0
Buy Neutral No Rating Source: UBS; as of 15 Jan 2015
Intel Corp. 16 January 2015
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Intel Corp. 16 January 2015
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Intel Corp. 16 January 2015
15
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Asia Pacific Equity Research
16 January 2015
Intel 4Q14 takeaway for Asia Tech PC stable, Datacenter remains strong; capex cut in contrast to TSMC The key messages from Intel’s 4Q14 analyst call were (1) PC demand continues to remain stable with DM consumer segment offsetting the fading out of corporate refresh cycle; (2) Datacenter revenues continuing strong growth (up 25% yoy in 4Q14), helped by cloud deployments, (3) unchanged growth expectations for 2015 (mid single digit revenue growth with flattish PC unit and strong datacenter momentum) (4) CAPEX budget lowered by $1bn to $10bn, a contrast to TSMC raising its capex to $11.5-12bn. (5) 1Q15 Guidance in line with normal seasonality but slightly weaker than street expectations. PC stability continues to help share gainers like Lenovo and Wistron, while the strong datacenter momentum continues to support our OW call on Quanta.
PC continues to remain stable - Y/Y unit growth for a fifth consecutive qtr. Intel’s PC client revenues were up 3% yoy in 4Q14 and overall units grew 6% yoy (the fifth consecutive quarters to see positive Y/Y growth since 4Q13), while blended ASP slightly dropped by 2%. Intel pointed out that DM demand, esp for consumer models, was stronger than EM, in line with comment from Gartner. Notebook demand (up 11% yoy) outgrew desktops (down 1% yoy), with the former supported by less cannibalization from tablets and the latter impacted by a tapering Win xp refreshment cycle. Looking into 2015, Intel forecasted the PC unit to be flattish with a slight drop in ASP, in line with market expectations. Intel expects near-term demand to remain healthy with appropriate inventory level, and it remains positive on the Core M & Broadwell U traction to sustain consumer demand. For 1Q15, Intel guides revenue to drop by 7% QoQ, in line with normal seasonality,
Data Center revenues surprised on the upside: Intel’s DCG (datacenter group) revenues continued to deliver strong growth with 25% yoy growth, supported by 15% increase in volume and 10% jump in ASP. Overall 2014 DCG revenue grew 18% yoy with 8/10% increase in volume/ASP respectively, driven by strength in enterprise and robust demand from cloud and networking. Looking into 2015, Intel expects robust growth in big data and healthy cloud construction demand to continue to boost data center group momentum, which would be a positive sign for Quanta.
TSMC to bridge valuation gap with Intel: Intel’s 2014 capex (at US$10bn) was lower than its original guidance of US$11bn. For 2015, Intel expects its capex to be flat yoy, while TSMC is guiding its capex to trend up 20-25% yoy to US$11.5-12bn. With TSMC expecting to commence volume production for 10nm by early 2017, we expect TSMC to catch up with Intel on timing and scaling at 10nm. Moreover, TSMC’s EBITDA also should approach Intel’s in 2015 (TSMC at $21bn vs. Intel at $26bn), while maintaining a faster pace of growth. With TSMC catching up with Intel on multiple fronts, we expect the valuation gap (TSMC 11x P/E vs. Intel 15x P/E) to also narrow.
Stock pick – prefer share gainers in PC space: – With Intel result & comment on overall PC market remaining healthy, we continue to prefer share gainers such as Lenovo, Quanta and Wistron, while we would avoid smaller vendors like Asus and Acer. We remain worried on Asus’ close partnership with Intel for mobile as the chipset vendor seems firm about cutting its mobile losses by $ 800M in 2015, which may increase Asus’ cost structure and harm its pricing flexibility.
Intel is covered by JPM US Analyst, Harlan Sur.
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Technology Gokul Hariharan AC (852) 2800-8564
[email protected] Bloomberg JPMA HARIHARAN J.P. Morgan Securities (Asia Pacific) Limited
William Chen (886-2) 2725-9871
[email protected] J.P. Morgan Securities (Taiwan) Limited
Rahul Chadha (886-2) 2725 9898
[email protected] J.P. Morgan Securities (Taiwan) Limited
James Wang (886-2) 2725-9875
[email protected] J.P. Morgan Securities (Taiwan) Limited
Alvin Kwock (852) 2800-8533
[email protected] J.P. Morgan Securities (Asia Pacific) Limited
www.jpmorganmarkets.com
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Companies Discussed in This Report (all prices in this report as of market close on 15 January 2015) ASUSTek Computer (2357.TW/NT$315.00/Underweight), Acer Inc (2353.TW/NT$20.35/Underweight), Intel (INTC/$36.19/Overweight), Lenovo Group Limited (0992.HK/HK$10.62/Overweight), Quanta Computer Inc. (2382.TW/NT$76.50/Overweight), TSMC (2330.TW/NT$131.5/Overweight), Wistron Corporation (3231.TW/NT$29.90/Overweight) Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as per KOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence or intervention. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
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Overweight (buy) 45% 56% 45% 75%
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Underweight (sell) 12% 33% 7% 52%
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Intel Corporation | January 15, 2015
MORGAN STANLEY RESEARCH MORGAN STANLEY & CO. LLC
January 15, 2015
Joseph Moore
Intel Corporation
[email protected]
Intel 4Q Eases Some Of Our Concerns But Some Headwinds Remain Industry View In-Line
Stock Rating Underweight
Price Target $32.00
Basically in line, as low end PC units were weaker than expected but servers were stronger. We still see 2015 PC processor headwind due to 2014 inventory build, but less so after 4Q weakness, and see server slowing post the end of Win 2003 support in July. Remain UW but raise PT to $32. Our Take: A mixed quarter, but one that partially narrowed the disconnnect that is central to our concerns (between microprocessor shipments and PCs). The sharp deceleration in unit growth, with notebooks down 6% q/q, partially eases the concerns that we raised after the exceptional growth in both 2q and 3q. But we note that the entirety of the inventory burn occurred in the low end/Bay Trail, and we still see headwinds this year overall as 2014 still benefitted from rebuilding channel inventory from low levels to normal levels. Separately, Data center was exceptionally strong, up 25% y/y (15% units, 10% prices), though some of that strength is likely attributable to Win 2003 support rolling off in 6 months, and could decelerate thereafter. Our estimates remain unchanged, slightly below consensus (which is also likely unchanged). We still think the stock will be under pressure given these headwinds in the supply chain, and see the stock at $32 by year end.
+1 212 761-7516
Craig Hettenbach
[email protected]
+1 212 761-6435
Alvin Lim, CFA
[email protected]
+1 212 761-6136
Intel Corporation ( INTC.O , INTC US ) Semiconductors / United States of America Stock Rating Industry View Price target Shr price, close (Jan 15, 2015) Mkt cap, curr (mm) 52-Week Range Fiscal Year Ending ModelWare EPS ($) Prior ModelWare EPS ($) P/E Consensus EPS ($)§ Div yld (%)
Underweight In-Line $32.00 $36.19 $188,752 $37.90-23.50
12/13 1.98 -
12/14e 2.41 2.33
12/15e 2.35 2.35
12/16e 2.43 2.49
13.1 1.89 3.5
15.0 2.24 2.5
15.4 2.37 2.7
14.9 2.65 2.7
Unless otherwise noted, all m etrics are based on Morgan Stanley ModelWare fram ework § = Consensus data is provided by Thom son Reuters Estim ates e = Morgan Stanley Research estim ates
QUARTERLY MODELWARE EPS ($) Quarter Q1 Q2 Q3 Q4
2013 0.44 0.42 0.56 0.56
2014e Prior 0.66
2014e Current 0.42a 0.57a 0.68a 0.74
2015e Prior 0.54 0.55 0.62 0.63
2015e Current 0.54 0.58 0.63 0.61
e = Morgan Stanley Research estim ates, a = Actual Com pany reported data
Positives from the quarter: 1) Weaker PC CPUs (notebooks down 6% q/q and up 11% y/y, vs. up 21% y/y last qtr) shows that some of the inventory burn we were concerned about played out in 4q, but without negatively impacting earnings because it was all in the low end. 2) Data center grew 25% y/y, well above our expectations, on 15% unit growth and 10% ASP improvement. 3) Capital spending came in lower for 2014, and 2015 forecasts came down as well, reflecting more efficient fab ramps, though the long term spending targets remain unchanged. Negatives from the quarter: 1) We still see aggregate Intel+ AMD CPU shipments up about 5% in 2014, reflecting inventory rebuild from low levels a year ago to normal levels now; we don't think there is excess, but since that inventory growth won't recur in 2015 it makes growing units in a flat demand environment difficult. Despite reasonably stable end demand, we remain concerned that the supply chain is still in a CPU digestion mode in 1q. 2) We do believe that some of the strength in servers is related to Microsoft winding down support on Windows Server 2003 in July 2015, so we could see some slowing in mid 2Q. 3) Street estimates likely come down slightly for 1Q, though we aren't particularly concerned about this - numbers for the year don't change.
Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision. For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report. 73
1
Intel Corporation | January 15, 2015
MORGAN STANLEY RESEARCH
Was the overall inventory build in 2Q and 3Q entirely Bay Trail? Recall that when Intel grew 15% y/y in PC microprocessors in 3Q, vs. flat end market demand, they described the difference as being mostly a function of 1) share gains vs. AMD, and 2) rebuilding artificially low inventory levels to normal levels, and a smaller impact from 3) Intel's classification of Surface Pro 3 as a PC vs. IDC calling it a tablet. But the share gains vs. AMD were mostly due to Bay Trail's impact on the value segment, so we wouldn't have expected the entirety of the build to be Bay Trail. Still, the slower numbers in 4Q do reduce our concerns somewhat. What happened: EPS of $0.74 on $14.7bn revs (vs. MSe $0.66 / $14.8bn and consensus $0.66 / $14.7bn). PC Client Group came in below our expectations growing 3% y/y vs. MSe. 9%. The miss is attributed to a smaller than expected y/y growth in notebook of 11% vs. MSe. 27%. Data Center Group exceeded our expectations with 25% y/y growth, as DCG benefited from the build out of cloud customers. The Mobile and Communication Group continues to bleed red with $6mn in top line loss and operating losses of $1.1bn. Gross margins of 65.4% were better than MSe and consensus estimates of 63.8% and 64% respectively on better ASPs in notebooks and servers. 1Q guidance was for revenues down seasonally, 60% gross margins vs. our 61% estimate given the first qtr of volume 14 nm production, and everything else in line with our ests. Estimates: Our estimates remain basically unchanged, at $2.20 for 2015 and $2.27 for 2016, though our cash flow estimates come up slightly on the lower capex. We are raising the price target from $30 to $32, as the weaker PC numbers in 4q make us feel better about the end market disconnect, and cash flow is a bit higher; our $32 target is 14x 2016e EPS, or about 18x 2016e free cash flow.
74
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Intel Corporation | January 15, 2015
MORGAN STANLEY RESEARCH
Risk Reward Intel (INTC, Underweight, $32 PT)
Recent Strength Leaves Little Room for Error Investment Thesis
So u rce: Th o mso n Reu ters, Mo rgan Stan ley Research
Core growth in PCs and servers is still key growth driver; expect minimal growth in 2015 Non PC/server initiatives likely continue to disappoint Foundry customers still unclear, beyond Altera, Panasonic which are small; we think building a sustainable earnings stream from foundry will be challenging. Tablet subsidies in 2014 makes sense, in that it builds critical mass around Android on x86. But turning it profitable will be a challenge. We are reasonably upbeat on prospects for servers, where microserver impact is small through 2015, and feel that eventually manufacturing leadership will lead to new, albeit small, new profit opportunities. Process node transitions taking longer; the company’s 2 year “tick/tock” cadence is clearly under some strain
Price Target $32
Base case scenario.
Bull
PC market grows 2015 and 2016, and Intel’s success in tablets drives multiple expansion – While investor focus is on foundry and smartphones, the key earnings driver remains PC and servers – Data center growth accelerates to 15% growth, as PCs grow modestly – Lower capex could fill the free cash flow/earnings GAAP
Potential Catalysts
Good execution continues but PC uptick fades next year leading to gross margin compression; we project: – Gross Margins: 61.3% GMs in 2015e and 61.9% in 2016e – 2015e and 2016e EPS of $2.20 and $2.27, respectively – Continued lack of substantial success in key non x86 initiatives (foundry, smartphones)
Risks to Achieving Price Target
$44
17x 2016e EPS of $2.64
Base
$32
14x 2016e EPS of $2.27, slight discount to the group (in line with history); 18x free cash flow
Bear
$22
14x 2016e EPS of $1.58
Assumes average selling price and units both decline 5% 2015 and 2016 due to mix shift to Bay Trail notebooks, without offsetting volume, and servers slow dramatically – Revenues declines at 2% 2015 – Return on assets declines from 18% to 12% by year end – Dividend perceived to be at risk – Multiple compression as concern builds about further margin degradation in 2016
Broadwell/14 nm ramp in 1h (low power consumption Intel CPU); Skylake in 2h Grantley server platforms in 2H drive relevant performance improvement
Biggest upside in our view would come if the recent strength in PCs in developed market enterprise spreads to consumer and emerging markets
75
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Intel Corporation | January 15, 2015
MORGAN STANLEY RESEARCH
Financial Summary Exhibit 1: Income Statement Summary
So u rce: Th o mso n Reu ters, Co mp an y Data, Mo rgan Stan ley Research estimates
Exhibit 2: Income Statement Variance
So u rce: Th o mso n Reu ters, Co mp an y Data, Mo rgan Stan ley Research estimates
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Intel Corporation | January 15, 2015
MORGAN STANLEY RESEARCH
Exhibit 3: Balance Sheet Summary
So u rce: Th o mso n Reu ters, Co mp an y Data, Mo rgan Stan ley Research
77
5
Intel Corporation | January 15, 2015
MORGAN STANLEY RESEARCH
Financials Exhibit 4: Intel: Projected Income Statement
So u rce: Co mp an y Data, Mo rgan Stan ley Research
Exhibit 5: Intel: Projected Balance Sheet
So u rce: Co mp an y Data, Mo rgan Stan ley Research
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Intel Corporation | January 15, 2015
MORGAN STANLEY RESEARCH
Exhibit 6: Intel: Project Cash Flow Statement
So u rce: Co mp an y Data, Mo rgan Stan ley Research
79
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Intel Corporation | January 15, 2015
MORGAN STANLEY RESEARCH
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Intel Corporation | January 15, 2015
MORGAN STANLEY RESEARCH Overweight, Equal-weight, Not-Rated and Underweight are not the equivalent of buy, hold, and sell but represent recommended relative weightings (see definitions below). To satisfy regulatory requirements, we correspond Overweight, our most positive stock rating, with a buy recommendation; we correspond Equal-weight and Not-Rated to hold and Underweight to sell recommendations, respectively. COVERAGE UNIVERSE
STOCK RATING CATEGORY
Overweight/Buy Equal-weight/Hold Not-Rated/Hold Underweight/Sell
TOTAL
INVESTMENT BANKING CLIENTS (IBC)
COUNT
% OF TOTAL
COUNT
% OF TOTAL IBC
% OF RATING CATEGORY
1156 1439 107 589
35% 44% 3% 18%
328 354 17 84
42% 45% 2% 11%
28% 25% 16% 14%
3,291
783
Data include common stock and ADRs currently assigned ratings. Investment Banking Clients are companies from whom Morgan Stanley received investment banking compensation in the last 12 months.
Analyst Stock Ratings Overweight (O). The stock's total return is expected to exceed the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Equal-weight (E). The stock's total return is expected to be in line with the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Not-Rated (NR). Currently the analyst does not have adequate conviction about the stock's total return relative to the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Underweight (U). The stock's total return is expected to be below the average total return of the analyst's industry (or industry team's) coverage universe, on a risk-adjusted basis, over the next 12-18 months. Unless otherwise specified, the time frame for price targets included in Morgan Stanley Research is 12 to 18 months.
Analyst Industry Views Attractive (A): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be attractive vs. the relevant broad market benchmark, as indicated below. In-Line (I): The analyst expects the performance of his or her industry coverage universe over the next 12-18 months to be in line with the relevant broad market benchmark, as indicated below. Cautious (C): The analyst views the performance of his or her industry coverage universe over the next 12-18 months with caution vs. the relevant broad market benchmark, as indicated below. Benchmarks for each region are as follows: North America - S&P 500; Latin America - relevant MSCI country index or MSCI Latin America Index; Europe MSCI Europe; Japan - TOPIX; Asia - relevant MSCI country index or MSCI sub-regional index or MSCI AC Asia Pacific ex Japan Index.
Stock Price, Price Target and Rating History (See Rating Definitions)
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Intel Corporation | January 15, 2015
MORGAN STANLEY RESEARCH
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Intel Corporation | January 15, 2015
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Intel Corporation | January 15, 2015
MORGAN STANLEY RESEARCH
INDUSTRY COVERAGE: Semiconductors COMPANY (TICKER)
RATING (AS OF)
PRICE* (01/15/2015)
E (09/10/2014) E (08/16/2013) O (08/16/2013) O (07/02/2013) O (08/16/2013) E (07/30/2014) O (08/16/2013) U (07/30/2014) E (08/16/2013) O (03/26/2014) U (08/16/2013) E (09/10/2014) ++ O (09/10/2014)
$51.93 $52.73 $8.16 $101.32 $15.92 $25.29 $44.84 $31.69 $44.46 $76.61 $9.68 $48.98 $33.14 $62.35
U (07/19/2013) O (08/24/2012) E (10/30/2013) O (08/24/2012) O (09/26/2013) E (08/24/2012) U (10/15/2014) E (08/24/2012) E (05/02/2014) E (04/08/2013) U (11/18/2013) O (09/05/2014) E (05/30/2012) O (08/16/2013)
$2.52 $33.98 $53.61 $40.95 $59.10 $18.10 $36.19 $13.33 $15.35 $29.30 $19.60 $78.52 $52.39 $41.04
Craig Hettenbach Amphenol Corp. (APH.N) Analog Devices Inc. (ADI.O) Atmel Corp (ATML.O) Avago Technologies Ltd (AVGO.O) Fairchild Semiconductor Int. Inc. (FCS.O) Freescale Semiconductor Ltd. (FSL.N) Linear Technology Corp. (LLTC.O) Maxim Integrated Products Inc. (MXIM.O) Microchip Technology Inc. (MCHP.O) NXP Semiconductor NV (NXPI.O) ON Semiconductor Corp. (ONNN.O) Sensata Technologies Holding N.V. (ST.N) Spansion Inc. (CODE.N) Te Connectivity Ltd (TEL.N)
Joseph Moore Advanced Micro Devices (AMD.O) Altera Corporation (ALTR.O) Ambarella Inc (AMBA.O) Broadcom Corporation (BRCM.O) Cavium Inc (CAVM.O) Inphi Corporation (IPHI.N) Intel Corporation (INTC.O) InvenSense, Inc. (INVN.N) Marvell Technology Group Ltd (MRVL.O) Micron Technology Inc. (MU.O) NVIDIA Corp. (NVDA.O) SanDisk Corporation (SNDK.O) Texas Instruments (TXN.O) Xilinx (XLNX.O)
Stock Ratings are subject to change. Please see latest research for each company. * Historical prices are not split adjusted.
© 2015 Morgan Stanley
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