4 Gems From Intel Corp.s Most Recent Form 10-Q Filing

By Ashraf EassaFool.com

A wafer of Intel's Xeon E5 v3 server processors. Source: Intel.

Each quarter, publicly traded companies are required to file quarterly reports with the Securities and Exchange Commission, known as form 10-Q. These reports are very similar to the quarterly earnings reports that companies provide on their investor relations pages, but with substantially more detail.

Continue Reading Below

After going over Intel'smost recent form 10-Q filing, I'd like to go over four items from the filing that, as an Intel stockholder, I found to be particularly interesting.

Understanding Intel's data center group performanceDuring the most recent quarter, Intel saw revenue from its highly lucrative data center group increase by 12% year over year. This revenue growth was driven by both a 6% increase in platform average selling prices coupled with a 6% increase in unit volumes.

Intel attributed this performance to "continued growth in the Internet cloud computing market segment." The company also said that "to a lesser extent, growth in the communications infrastructure market segment contributed to the increase."

The company also said that operating income in this segment grew by 9%, three percentage points below revenue growth, as a result of a $106 million increase in operating expenses. It's good to see that Intel is still increasing its investments in this segment, especially in light of its already overwhelmingly dominant position in the market.

How much did Intel pay for Lantiq? During the second quarter of 2015, Intel announced that it had acquired Lantiq Semiconductor. This acquisition, per the company, is "intended to extend Intel's success in cable home gateways into DSL and fiber markets."

Intel didn't disclose how much it actually paid for Lantiq, but in the company's most recent 10-Q filing, the company said that it paid $383 million for it. Interestingly, Intel said that it allocated the majority of the acquisition price to "goodwill, acquisition-related developed technology, and acquisition-related customer relationships."

In the filing, Intel also disclosed that during the first nine months of 2015, it completed five acquisitions for a total consideration of $591 million. These acquisitions, per Intel, "were not significant to [its] results of operations."

What has driven Intel's research and development spending increase year to date?In the filing, Intel said that its research and development spending year to date was up by $462 million, a 5% boost, from the prior year period. The company attributed this increase to "higher product development."

These higher product development costs were principally in the company's fast-growing Data Center and Internet of Things groups. Additionally, Intel said that it is seeing "higher process development costs" for its 10-nanometer manufacturing technology, impacting the bottom line in the company's "all other" segment.

Intel also said that the increased product development costs were partially offset by declines in profit-dependent spending.

Significant cost cutting in the company's software and services segmentEven though the company saw revenue in its software and services group decline from $558 million to $556 million, operating profit jumped from just $29 million to $102 million. This $73 million increase in operating income, according to the filing, came as a result of a $22 million increase in gross margin and a reduction of $51 million in operating expenses.

If Intel can keep its expenses in this segment in check going forward, then the company's software and services group could actually become a meaningful contributor to the company's bottom line in the coming years.

The article 4 Gems From Intel Corp.s Most Recent Form 10-Q Filing originally appeared on Fool.com.

Ashraf Eassa owns shares of Intel. The Motley Fool recommends Intel. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.