How we listen - taking copius notes:  In the basic presentation, we like to actually type up snippets of quotes in our workbook notes from the company's conference call that we think are compelling indicators.  Here's what we noted:

• CEO:  "It was notable this quarter that demand for our higher-end PC products was particularly strong, which helped improve margins and profitability. Our mobile business set a new revenue record, as demand for notebooks continues to be excellent. We're also seeing signs of corporate demand returning, which we believe will continue to improve, given the age of the corporate PC fleet, and the compelling ROI (return on investment) that our new generation of servers presents."
  Key takeaway:  Mobile business is growing at record pace; corporate PC replacement cycle occurring; corporate server sales strong, based on attractive ROI.

• "CEO:   "In our manufacturing environment, our factory teams have executed the ramp of our 32 nanometer process superbly. We exceeded output expectations with lower costs than anticipated... 32 nanometers is our fastest ramping process ever, and I'm pleased to note that we are accelerating the ramp of our third and fourth 32 nm factories, faster than our original plan, such that by early Q4, we will have four factories in production on 32 nanometers."
  Key takeaway:  Latest technology, 32 nanometer processing manufacturing, is ahead of schedule and strong.

• "CEO:   "Lastly, we are excited by our next generation of processors, code named "Sandy Bridge"... are planning for volume production later this year."
  Key takeaway:  They are continuing to innovate with better technology, and are planning on volume production and sales in latter part of 2010.

• "CEO:   "As we look forward, we are optimistic about the prospects for our business for the rest of 2010 and beyond. Our product portfolio, combined with our excellent execution and the ongoing benefits from restructuring, have us positioned for continued profitable growth."
  Key takeaway:  They predict continued profitable growth, no losses in the near future.

• "I look forward to seeing many of you here in May for our investor meeting, where we will talk in more detail on how we plan to build on this momentum, and further exploit the growth opportunities before us."
  Key takeaway:  Watch for upcoming May investor's day, and plan to listen to that presentation for more insights.

• They then turned over the call to Intel's CFO, who continued with a general regurgitation of financial results reported in the 10-Q.  Again, he is obviously reading from a script, but still upbeat in his tone.

• Q&A began.  There were a total of 34 questions in the Q&A session.  The entire call length was 51 minutes.

• Our additional takeaway points from all of Intel's Q&A responses are below:

  • This is the first quarter where they've seen corporate PC buying picking back up again.

  • The average fleet of notebooks is four years old; desktops - five years old.  Again, talked about ROI where it makes more sense to swap out units, versus cost of continued ownership of older models.

  • The strength of business surprised them, and the strength of cash generation was also surprising.  They have done minimal stock buybacks over the last year to grow their cash balance, allowing them to look at strategic investments (acquisition targets?).  The priority in terms of returning cash to the shareholders is the dividend, increasing it in Q4, following multiple years of increasing the dividend without fail.  Increasing the dividend over time continues to be the priority.  

  • CEO:  "I think the overall shift to mobility is one of the megatrends that's out there, both from the consumer standpoint and the corporate standpoint."

  • 1st quarter and even 1st half numbers are being buoyed by Chinese market, new product launches, and starting to see corporate PC purchases re-emerge.  People are buying things to replace older machines because it's just cheaper.

  • Netbooks - those smaller internet-focused laptop-like devices - have settled out to represent about 20% of the mobile form factors.  They expect pretty significant year-over-year growth in this segment.  By definition, they are a consumer purchase; there is no corporate use of netbooks that they've found.  CEO:  "I still think there will be significant growth in the netbook business year over year.  There are... rather than pricing, I think that we would look to features and integration as the technical knobs we would twist here. The next innovation coming out on Atom (processors) is dual-core, which comes out in the 2nd quarter, so that will ramp for the holiday season this year, and I think that will be a very attractive product.  And then, in early Q1, we have another innovation at much lower power... integration at much lower power... product coming out that's a derivative of it for fanless netbook business." (That's interesting product news)  

  • Tablets - question was asked about emerging category in tablets (given the iPad's release):  They responding indicating they view tablets much like they saw netbooks two years ago.  That was a new category then that was "market expansive" (i.e., will expand the market, as incremental devices, rather than replace other products within it).  They believe that tablets will also be market expansive.  Beyond the obvious Apple iPad, they said that a lot of their PC maker customers are going to be announcing new tablet devices that use Intel's Atom processor, with support for many operating environments, including Android (Google), Windows 7 (Microsoft), and on Migo (?).

  • Cloud Computing - CEO:  "The move to Cloud (computing) we think is very good... Not everything will go to cloud, but the shift to cloud-based services is good for Intel."

  • Server Market - CEO:  "If you plot out, and we'll do this at the Analyst Meeting in much more detail, but if you plot out the growth in data traffic, in network traffic... in the kinds of things that modern servers are doing... that growth curve is faster than the refresh rate for old versus new equipment, and we see a very robust scenario for servers going forward."

  • Reason for increases in expenditures:  About half of the reason for the increase is for revenue-depending spending (almost all for marketing), and then the profit-dependent spending gets split across the different groups of the company, so that's about half of the increase.  In addition to that, they have some incremental investments they're making, predominantly for research and development projects.  And then another increase to marketing, where some customer program redesigns have been categorized going forward as marketing expenses.

  • Dual Processors vs. New Processors - CEO:  "I would expect that the dual-processor products will continue to be... the topography of choice for data center buildouts, for the big internet portal guys, and you can imagine who I'm talking about (we guess, Google, Yahoo and Bing).  The MP Server configurations tend to be much more for... I think, you'll see that much more prevalent in a corporate environment, and SAP configurations, and people that want to run multiple applications in a virtual mode there.  So I really think that their addressing different market segments as they ramp up.  But, you know, we love both of our children here, and I don't think I see a difference in the curves between the two of them." 

  • New WiDi HD wireless display device (i.e., wireless connectivity of your notebook over HDMI technology to an HDTV) -  CEO:  "First of all, the WiDi product has been very well-received.  It's selling through the channel nicely at Best Buy, which is where it really is semi-exclusive right now."  (Hmm... interesting).  "Over the course of the year, you'll see many more SKUs ("shelf keeping units" or individual product offerings) and many more distributors picking up the product, and I think it will be a must-have feature for (the) holiday timeframe.  It may come down in price a bit but, generally speaking, I think it's going to get broader before it gets a lot cheaper.  In terms of other vendors trying to do similar technology, I say 'good luck.'  This took us quite a while to be able to develop, to be able to get this done.  We have a roadmap of features that will take WiDi (to be) better over time, and add more content protection, Blu-Ray support, etc.  So this is one where being out early, doing a lot of the work at the platform level... at the software level... and then having a feature roadmap, I think, really is what makes it compelling." 

  • Announced 2nd Quarter Earnings Conference Call:  July 13, 2010.  Put it on your follow-up calendar ("Key Homework Dates") in your workbook for this stock.

  • Other stock stories/opportunities from the call?:   We did not hear anything of significant note for other stock buying (or selling) indications.  The most compelling (and "sexy" from a new marketing standpoint came from the last question about their new WiDi device technology.  We think this could be marketed, and poised, to provide both excitement for the stock around the holidays and create unplanned incremental earnings.  We will definitely watch for reports on the success of this device.

  • Key takeaway (overall) from Q&A session:  Management was impressive, and confident in their answers.  They showed genuine excitement at their prospects and we think left the listening audience with optimism from their upbeat responses.

Looking forward to the next quarter:  Okay, so that covered the last quarter for Intel.  Now what did they say about their expectations for earnings in the following quarter?  That's what the next step covers:  Earnings Guidance Provided...