Intel

Intel reported 32 cents ($2 billion) of profit on $9.96 billion of sales on Tuesday night. While that sounds like a lot of money, it was below the 33 cents and $9.92 billion the Wall Street crowd was expecting.

That sounds like a slight miss, but that headline shortfall doesn't begin to tell the horrific balance sheet problems building at Intel.

==> Intel reported 38% year over year growth in notebook chips, but only desktop chips sales only grew by 9%. The bread-and-butter business of desktop computers is shrinking like a prune.

==> Intel warned that its Q4 sales forecast of $10.2 to $10.8 billion makes the analyst forecast of $10.7 billion appear much too optimistic.

==> Intel used $2.5 billion in cash to repurchase 93.6 million shares of its common stock, paying an average of $26.70 a share. With Intel now trading around $23, Intel just lost close to $300 million by investing in its own stock.

==> Overhead is exploding. Marketing, general and administrative expenses (overhead) increased from $1.12 billion last year to $1.47 in Q3 of this year. That extra $350 million is pure overhead and one of those telltale sales of a company that is growing too fat for its own pants.

==> $145 million of Intel's $2 billion of Q3 profits was from interest and "other" income. What alarms me is that this interest and "other" income grew from $63 million last year to $145 million last quarter. This almost $100 million gain of "other" income is very suspicious and

==> Intel's cash horde is shrinking, falling form $12.6 billion to $11.9 billion in just 90 days and way, way down from $14 billion at the beginning of the year.

==> Intel inventory of unsold chips grew from $849 million to $1 billion by the end of Q3. Can you say, "inventory build?" At the same time, Intel's accounts receivables grew from $3.4 billion to $3.75 billion. We're talking about half a billion dollars ($151 million of inventory and $350 million of accounts receivables) of fancy accounting footwork.

==> And get this. Accounts payable jumped from $5.4 billion to $6.6 billion in last 90 days. Ah shucks, we're only talking about an extra $1.2 billion.

Intel