Thursday 28 April 2016

Intel report Q1 2016

Intel, Q1, 2016, front page

The first quarter report from Intel was not that well accepted and the share price dropped on the day of the release. Personally I was pretty neutral to the report and if one had high expectations regarding the report and the future outlook then one did not get too excited about this report because almost every outlook was down compared to their previous forecast for the year.

To view the report in full please click here and for my previous summary please see the Intel annual report 2015 and to find out more concerning Intel then please go to analysis of Intel 2016.

Looking at the financial statement below then we see that revenue was up a little compared to Q1 last year but down from Q4. The worst is probably that even though the revenue was up compared to Q1 2015 we still ended up with flat earnings. Cost of sales increased significantly and R&D and marketing also increased.

Intel, Q1, 2016, financial statement

The report did, as I already mentioned, not disturb me that much but the response of the CEO took me very hard. Cutting 12,000 positions or over 10% of the workforce is a very drastic (panic) measure to do. I do not like when CEOs run out in panic as if the house is on fire and even then please leave the property in an orderly fashion.

Until it is decided who will be forced to leave etc. the level of unhappiness will only keep building up. Once the people are out... which will cost a lot of money... the people remaining will either be able to cover for the lost hands or they will not... on top of them being annoyed and maybe unhappy. I bought Intel due to the happiness level of employees according to Glassdoor and my guess is that this level will fairly quickly change in the near future.

Conclusion: For me the management decision was a bit similar to what happened with Fugro. I simply do not like it and back then I decided that when the management takes a decision that I do not like then I should sell. I was very close to sell Intel, actually I am still sucking on my thumb regarding it. Warren says that one should not do that but I am not Warren so I keep sucking. Additionally I find it difficult to sell a company that have billions in earnings and that trade around P/E 13. Nah... I will remain as a thumb sucking shareholder.

No comments: