There is a long road to any profitability from this point in Intel's history. Intel got itself with all this dead wood and ancient style of management into very peculiar, very tricky position, where Finance needs to cover more then $10B USD in cash (magical hokus-pokus).
From Intel's books:
Total Cash (mrq): 15.29B
Total Debt (mrq): 25.60B
What is the next step? Buying some other nowhere-to-go-dot.com junk for >$26B USD (as one ecosystem partner already did)???
What if 10nm products don't show up till 2018, tell me why that isn't a likely trend given how things are going currently? BK could happen much sooner than anyone thinks. It isn't like they got a lot new desirability on 14nm. Dang even by end of 2017 that first product will look about as desirable as a 65 year old woman walking down the wedding aisle for the first time, LOL
With shrinkage comes the loss of wafer scale.
This is the main competitive advantage from which all other business is dependent. It becomes a viscous cycle as shrinking volumes expose fixed capital costs and R&D spend.
The key to everything is PC client volume which has been declining at an alarming rate.
To be accurate, there's no problem with profitability. The issue is growth, or really, George Castanza-like shrinkage
It's really pathetic that Intel needed to buy their only custom foundry customer. They can't even get that right since Altera is almost 2 years late on their high end stratix-10 part which is supposed to debut on Intel's 14nm in MID 2017. This does not inspire confidence. I wouldn't be surprised if they can never get it to work at Intel and then have to backtrack back to TSMC.
@jhz writes: those assets depreciate and are pretty much useless to anyone except Intel (talking about the fabs). It's not like Intel can put up Fab 42 to raise capital if they are called on their debt obligations. You have to use your brain and not rely on simple ratios.
Ahhhh... Finally got the picture WHY INTEL bought ALTERA!? INTEL factories are light, so INTEL executive management decided to use ALTERA as extras to add to INTEL factories.
Well... This happens when you have bunch of CCG directors (WWID 1000XYZT) who think they are Gods on the Sky. Sky is falling, CCG idiots, don't you see? ;-)
@bar those assets depreciate and are pretty much useless to anyone except Intel (talking about the fabs). It's not like Intel can put up Fab 42 to raise capital if they are called on their debt obligations. You have to use your brain and not rely on simple ratios.
Not sure where you got your numbers. As of end of Q1, Intel had $27B in current assets and only $17B in current liabilities. That's current ratio of 1.7. So intel isn't in any danger of needing to raise money anytime soon. For comparison, AMD only had 1.17 while Nvidia had 2.44.
The x86 client cash cow is burning. What to do?
Raise cash from Mcafee sale.
IoT and memory hail mary.
Go all in on servers hoping that there will be no competition even as key customers position their software to be x86-independent.
Race to the last node.
It's pretty bleak given a 5-10 year horizon.