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But a closer look showed that the Santa Clara, Calif.-based company's bottom line of $0.55 per share versus a forecast for $0.50 a share was actually the result of an abnormally low tax rate.
The effective tax rate for the INTC Q2 earnings was just 9.3%, far below the usual range of 23% to 28%. For example, the Intel tax rate in Q1 was 25.5%. The rate in Q2 of 2014 was even higher at 28.7%.
Intel CFO Stacy Smith attributed the low tax rate to a "one-time refund claim and our decision to indefinitely reinvest certain prior years' non-U.S. earnings."
But the tax rate quirk was not highlighted in the Intel Q2 earnings press release, nor was it brought up during the conference call.
Applying the more typical Intel Q2 2014 tax rate would have dropped the earnings per share to $0.43 -- a big earnings miss. And sure enough, operating income fell dramatically from $3.8 billion to $2.9 billion.
The Intel Q2 earnings beat on revenue is unaffected by the tax quirk, however. Revenue for Q2 was $13.2 billion, which beat the forecast for sales of $13.04 billion.
Apparently company executives didn't want this black spot on the Intel Q2 earnings to obscure the real progress the company has made in its transition away from the declining PC business.
The divisions focused on three growth areas - data centers, the Internet of Things, and memory chips - accounted for 40% of revenue and 70% of profits. Just a few quarters ago, the PC business represented more than half of Intel's profits.
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About the Author
David Zeiler, Associate Editor for Money Morning at Money Map Press, has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.