Team Work2

Intel Corporation We have added“ cost of sales” and “operating expenses ”in the table. Intel Corp. INCOME STATEMENT 2008 Rate 2006 Revenue ($mil.) 37,586.0 6.23% 35,382.0 Cost of sales ($mil.) 16,742.0 17,165.0 -4%(cost/sales) Gross Profit ($mil.) 20,844.0 18,218.0 14.41% Operating expenses($mil) 1,315.0 11,126 18.19% Operating Income ($mil.) 7,694.0 7,092.0 8.49% Total Net Income ($mil.) 5,292.0 5,044.0 4.92% EPS 0.92 0.86 6.98% STRENGTHS: 1. Between the years 2006 and 2008. Company Intel managed to increase revenue by about 6.23%, while reducing its cost from 48.5% to 44.5 %[( Revenue-gross profit)/Revenue] of sales. 2. Gross income in 2008 increased significantly, which is a huge plus for the company`s profitability. 3. In 2008 Intel’s operating income has raised about8.49%. 4. The bottom line-net income-for the company in 2008 has increased from $5,044 in 2006 to 5,292 in 2008. It’s not too much, but it is very difficult to get such a profit in 2008. 5. Intel’s EPS has increased about 6.98%. This is very good. Anyway, EPS is an important element of investment

WEAKNESSES 1. The Intel’s profit margins went down from 14.3% to 14.1%. (Net income/net sales). This means Intel’s income may decline in the future. 2. And operating expenses has increased 18.19%, compared with operating income it has raised too much. It dragged whole company’s income.

Intel Corp. CASH FLOW STATEMENT Net Operating Cash Flow Net Investing Cash Flow Net Financing Cash Flow STRENGTHS:

Dec08 10,926.0 (5,865.0) (9,018.0)

Dec06 10,620.0 (4,907.0) (6,439.0)

Rate 2.88% -19.52% -40.05%

1. From CFS of Dec06 to Dec08, we can see that the net operating cash flow for Intel was increased by about 2.88%. 2. The net investing cash flow was always negative. And it has decreased from -$4907 to- $5865, which is decreased about 19.5%. So much outflow of funds means that Intel has invested in something. It means that Intel has made good use of company’s funds.

WEAKNESSES： 1. The net financing cash flow was always negative, too. The cash-out amount has reached -$9,018. It has decreased by about 40%. It means that Intel has not raised enough funds. And Intel can’t operate company’s funds normally. 2. The cash flow for Intel ended Dec08 was $-3957 which is decreased by about 445.04%. It means Intel did not have enough money now. 3. While investment is a good thing, but Intel’s so much investments give it the risk of cash shortage.

Advanced Micro Devices AMD INCOME STATEMENT Revenue ($mil.) Cost of sales ($mil.) Gross Profit ($mil.) Operating expense ($mil) Operating Income ($mil.) Total Net Income ($mil.) EPS

2008 5,808.0 3,488.0 2,320.0 4,300.0 (1,980.0) (3,098.0) (5.10)

2006 5,649.0 2,856.0 2,793.0 2,810 (17.0) (166.0) (0.34)

Rate 2.81% 9.5%(cost/sales) -16.9% 53.02% -29.3% -8.32% -15.8%

STRENGTHS: STRENGTHS: 1. Between the years 2006 and 2008.AMD’s sales increased by about 2.81%. WEAKNESSES 1. AMD’s cost of sales (gross profit-revenue) increased from 51% to 60%of sales. 2. Gross profit reduced so much---- (-16.9%), which is a huge impact for the company’s profitability. 3. Also operating income went down from $2,799 to$1,980. 4. While the operating expenses increased rapidly from 50%to 74%. There is no doubt that ADM has met some serious economic problems. 5. As the result, the bottom line-net income-for the company in 2008 has decreased from$-166 to $-3,098. 2006 is not a good start. And ADM has not control this trend. 6. The negative trends in almost all the statement components have dragged the company’s profit margins from -2.9% to -53.3 %, which is really terrible. 7. Also, AMD’s EPS decreased about 15.8%.

AMD CASH FLOW STATEMENT

Dec08

Dec06

Rate

Net Operating Cash Flow

(692.0)

1,287.0

-153.77%

Net Investing Cash Flow

(27.0)

(4,303.0)

99.37%

Net Financing Cash Flow

220.0

3,763.0

-94.15%

STRENGTHS: 1. In Dec06 AMD made substantial investments, the CFI was -$4,303. But in dec08, the CFI was - $27. It means that AMD has done some countermeasures to solve the problem of shortage of funds. And the countermeasure has worked.

WEAKNESSES 1. From this CFS, we can see that cash flow for AMD was $ -499. It is not a good sign for investor. It means that AMD doesn’t have sufficient money for company’s effective operation. 2. The CFO was reduced about 153.77%. AMD must meet some financial problem which tied up its capital. This will impact investor’s decision seriously. 3. The CFF was decreased by about 94.15%. AMD always can collected money, but the amount was decreased.

CONCLUSION In view of the performance of the two companies, we will invest Intel. Intel’s EPS was continued to rise. And Intel’s income statement performed very well. We think Intel will be a good choice for investors.