Revenue, earnings, gross margin, and operating margin all nicely ahead of consensus.
Stock up in after-market.
SANTA CLARA, Calif.–(BUSINESS WIRE)–Intel Corporation today reported first-quarter revenue of $10.3 billion. The company reported operating income of $3.4 billion, net income of $2.4 billion and EPS of 43 cents.
“The investments we’re making in leading edge technology are delivering the most compelling product line-up in our history,” said Paul Otellini, Intel president and CEO. “These leadership products combined with growing worldwide demand and continued outstanding execution resulted in Intel’s best first quarter ever. Looking forward, we’re optimistic about our business as Intel products are designed into a variety of new and exciting segments.”
GAAP Financial Comparison Q1 2010 vs. Q4 2009 vs. Q1 2009 Revenue $10.3 billion down 3% up 44% Operating Income $3.4 billion up 38% up 433% Net Income $2.4 billion up 7% up 288% Earnings Per Share 43 cents up 3 cents up 32 cents Non-GAAP Financial Comparison Q1 2010 vs. Q4 2009 Revenue $10.3 billion down 3% Operating Income $3.4 billion down 8% Net Income $2.4 billion down 21% Earnings Per Share 43 cents down 12 cents The settlement agreement with AMD of $1.25 billion and the related tax impacts of that charge are excluded from Q4 2009 results in this Non-GAAP comparison.Q1 2010 Highlights (all comparisons sequential)
- PC Client Group revenue was flat, with record mobile microprocessor revenue.
- Data centre Group revenue down 8 per cent.
- Other Intel Architecture group revenue down 9 per cent.
- Intel® Atom™ microprocessor and chipset revenue of $355 million was down 19 per cent.
- The average selling price (ASP) for microprocessors was slightly up.
- Excluding shipments of Intel Atom microprocessors, the ASP was approximately flat.
- R&D plus MG&A spending of $3.1 billion was higher than the company’s prior expectation.
- The effective tax rate was 29 per cent, in-line with the company’s prior expectation.
The Outlook for the second quarter does not include the gain expected from the sale of our investment in Numonyx, nor does it include the effect of any other acquisitions, divestitures or similar transactions that may be completed after April 12th.
- Revenue: $10.2 billion, plus or minus $400 million.
- Gross margin percentage: 64 per cent, plus or minus a couple percentage points.
- R&D plus MG&A spending: Approximately $3.1 billion.
- Impact of equity investments and interest and other: approximately zero.
- Depreciation: Approximately $1.1 billion.
- Gross margin percentage: 64 per cent, plus or minus a couple percentage points. The company’s prior expectation was 61 per cent plus or minus 3 percentage points.
- Spending (R&D plus MG&A): $12.4 billion, plus or minus $100 million. The company’s prior expectation was $11.8 billion, plus or minus $100 million.
- R&D spending: Approximately $6.4 billion.
- Tax rate: Approximately 31 per cent for the second, third and fourth quarters.
- Depreciation: Approximately $4.4 billion, plus or minus $100 million.
- Capital spending: Expected to be $4.8 billion, plus or minus $100 million.
Status of Business Outlook
During the quarter, Intel’s corporate representatives may reiterate the Business Outlook during private meetings with investors, investment analysts, the media and others. From the close of business on May 28 until publication of the company’s second-quarter earnings release, Intel will observe a “Quiet Period” during which the Business Outlook disclosed in the company’s news releases and filings with the SEC should be considered as historical, speaking as of prior to the Quiet Period only and not subject to an update by the company.
The above statements and any others in this document that refer to plans and expectations for the second quarter, the year and the future are forward-looking statements that involve a number of risks and uncertainties. Many factors could affect Intel’s actual results, and variances from Intel’s current expectations regarding such factors could cause actual results to differ materially from those expressed in these forward-looking statements. Intel presently considers the following to be the important factors that could cause actual results to differ materially from the corporation’s expectations.
- Demand could be different from Intel’s expectations due to factors including changes in business and economic conditions; customer acceptance of Intel’s and competitors’ products; changes in customer order patterns including order cancellations; and changes in the level of inventory at customers.
- Intel operates in intensely competitive industries that are characterised by a high percentage of costs that are fixed or difficult to reduce in the short term and product demand that is highly variable and difficult to forecast. Additionally, Intel is in the process of transitioning to its next generation of products on 32nm process technology, and there could be execution issues associated with these changes, including product defects and errata along with lower than anticipated manufacturing yields. Revenue and the gross margin percentage are affected by the timing of new Intel product introductions and the demand for and market acceptance of Intel’s products; actions taken by Intel’s competitors, including product offerings and introductions, marketing programs and pricing pressures and Intel’s response to such actions; defects or disruptions in the supply of materials or resources; and Intel’s ability to respond quickly to technological developments and to incorporate new features into its products.
- The gross margin percentage could vary significantly from expectations based on changes in revenue levels; product mix and pricing; start-up costs, including costs associated with the new 32nm process technology; variations in inventory valuation, including variations related to the timing of qualifying products for sale; excess or obsolete inventory; manufacturing yields; changes in unit costs; impairments of long-lived assets, including manufacturing, assembly/test and intangible assets; the timing and execution of the manufacturing ramp and associated costs; and capacity utilization.
- Expenses, particularly certain marketing and compensation expenses, as well as restructuring and asset impairment charges, vary depending on the level of demand for Intel’s products and the level of revenue and profits.
- The tax rate expectation is based on current tax law and current expected income. The tax rate may be affected by the jurisdictions in which profits are determined to be earned and taxed; changes in the estimates of credits, benefits and deductions; the resolution of issues arising from tax audits with various tax authorities, including payment of interest and penalties; and the ability to realise deferred tax assets.
- Gains or losses from equity securities and interest and other could vary from expectations depending on gains or losses realised on the sale or exchange of securities; gains or losses from equity method investments; impairment charges related to debt securities as well as equity and other investments; interest rates; cash balances; and changes in fair value of derivative instruments.
- The majority of our non-marketable equity investment portfolio balance is concentrated in companies in the flash memory market segment, and declines in this market segment or changes in management’s plans with respect to our investments in this market segment could result in significant impairment charges, impacting restructuring charges as well as gains/losses on equity investments and interest and other.
- Intel’s results could be impacted by adverse economic, social, political and physical/infrastructure conditions in countries where Intel, its customers or its suppliers operate, including military conflict and other security risks, natural disasters, infrastructure disruptions, health concerns and fluctuations in currency exchange rates.
- Intel’s results could be affected by the timing of closing of acquisitions and divestitures.
- Intel’s results could be affected by adverse effects associated with product defects and errata (deviations from published specifications), and by litigation or regulatory matters involving intellectual property, stockholder, consumer, antitrust and other issues, such as the litigation and regulatory matters described in Intel’s SEC reports. An unfavorable ruling could include monetary damages or an injunction prohibiting us from manufacturing or selling one or more products, precluding particular business practices, impacting our ability to design our products, or requiring other remedies such as compulsory licensing of intellectual property.
A detailed discussion of these and other factors that could affect Intel’s results is included in Intel’s SEC filings, including the report on Form 10-K for the fiscal year ended Dec. 26, 2009.
Intel will hold a public webcast at 2:30 p.m. PDT today on its Investor Relations Web site at www.intc.com. A webcast replay and MP3 download will also be made available on the site.
Intel plans to report its earnings for the second quarter of 2010 on Tuesday, July 13, 2010. Immediately following the earnings report, the company plans to publish a commentary by Stacy J. Smith, vice president and chief financial officer at www.intc.com/results.cfm. A public webcast of Intel’s earnings conference call will follow at 2:30 p.m. PDT at www.intc.com.
Intel [NASDAQ: INTC], the world leader in silicon innovation, develops technologies, products and initiatives to continually advance how people work and live. Additional information about Intel is available at www.intel.com/pressroom and blogs.intel.com
Intel, the Intel logo, Intel Xeon, Intel Core, and Intel Atom are trademarks of Intel Corporation in the United States and other countries.
* Other names and brands may be claimed as the property of others.
INTEL CORPORATION CONSOLIDATED SUMMARY STATEMENT OF OPERATIONS DATA (In millions, except per share amounts) Three Months Ended March 27, March 28, 2010 2009 NET REVENUE $ 10,299 $ 7,145 Cost of sales 3,770 3,907 GROSS MARGIN 6,529 3,238 Research and development 1,564 1,317 Marketing, general and administrative 1,514 1,198 R&D AND MG&A 3,078 2,515 Restructuring and asset impairment charges – 74 Amortization of acquisition-related intangibles and costs 3 2 OPERATING EXPENSES 3,081 2,591 OPERATING INCOME 3,448 647 Gains (losses) on equity investments, net (31) (113) Interest and other, net 29 95 INCOME BEFORE TAXES 3,446 629 Provision for taxes 1,004 – NET INCOME $ 2,442 $ 629 BASIC EARNINGS PER COMMON SHARE $ 0.44 $ 0.11 DILUTED EARNINGS PER COMMON SHARE $ 0.43 $ 0.11 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: BASIC 5,529 5,573 DILUTED 5,681 5,634 INTEL CORPORATION CONSOLIDATED SUMMARY BALANCE SHEET DATA (In millions) March 27, Dec. 26, 2010 2009 CURRENT ASSETS Cash and cash equivalents $ 4,988 $ 3,987 Short-term investments 5,927 5,285 Trading assets 5,427 4,648 Accounts receivable, net 2,192 2,273 Inventories: Raw materials 464 437 Work in process 1,473 1,469 Finished goods 1,049 1,029 2,986 2,935 Deferred tax assets 1,423 1,216 Other current assets 781 813 TOTAL CURRENT ASSETS 23,724 21,157 Property, plant and equipment, net 17,028 17,225 Marketable equity securities 926 773 Other long-term investments 4,326 4,179 Goodwill 4,452 4,421 Other long-term assets 5,317 5,340 TOTAL ASSETS $ 55,773 $ 53,095 CURRENT LIABILITIES Short-term debt $ 330 $ 172 Accounts payable 1,912 1,883 Accrued compensation and benefits 1,377 2,448 Accrued advertising 843 773 Deferred income on shipments to distributors 653 593 Income taxes payable 916 86 Other accrued liabilities 2,881 1,636 TOTAL CURRENT LIABILITIES 8,912 7,591 Long-term income taxes payable 174 193 Long-term debt 2,052 2,049 Other long-term liabilities 1,735 1,558 Stockholders’ equity: Preferred stock – – Common stock and capital in excess of par value 15,466 14,993 Accumulated other comprehensive income (loss) 414 393 Retained earnings 27,020 26,318 TOTAL STOCKHOLDERS’ EQUITY 42,900 41,704 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 55,773 $ 53,095 INTEL CORPORATION SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION (In millions) Q1 2010 Q4 2009 Q1 2009 GEOGRAPHIC REVENUE: Asia-Pacific $5,888 $5,964 $3,647 57% 57% 51% Americas $1,906 $2,088 $1,510 18% 20% 21% Europe $1,404 $1,524 $1,273 14% 14% 18% Japan $1,101 $993 $715 11% 9% 10% CASH INVESTMENTS: Cash and short-term investments $10,915 $9,272 $7,792 Trading assets – marketable debt securities (1) 5,427 4,648 2,521 Total cash investments $16,342 $13,920 $10,313 TRADING ASSETS: Trading assets – equity securities offsetting deferred compensation (2) – – $286 Total trading assets – sum of 1+2 $5,427 $4,648 $2,807 SELECTED CASH FLOW INFORMATION: Depreciation $1,080 $1,172 $1,208 Share-based compensation $248 $200 $213 Amortization of intangibles $61 $89 $62 Capital spending ($928) ($1,081) ($1,509) Investments in non-marketable equity instruments ($45) ($85) ($41) Proceeds from sales of shares to employees, tax benefit & other $230 $36 $247 Dividends paid ($870) ($774) ($779) Net cash received/(used) for divestitures/acquisitions ($37) – – EARNINGS PER COMMON SHARE INFORMATION: Weighted average common shares outstanding – basic 5,529 5,522 5,573 Dilutive effect of employee equity incentive plans 101 77 10 Dilutive effect of convertible debt 51 51 51 Weighted average common shares outstanding – diluted 5,681 5,650 5,634 STOCK BUYBACK: Cumulative shares repurchased (in billions) 3.4 3.4 3.3 Remaining dollars authorised for buyback (in billions) $5.7 $5.7 $7.4 OTHER INFORMATION: Employees (in thousands) 79.9 79.8 82.5 INTEL CORPORATION SUPPLEMENTAL OPERATING GROUP RESULTS ($ in millions) Three Months Ended Q1 2010 Q4 2009 Q1 2009 Net Revenue PC Client Group Microprocessor revenue $ 5,913 $ 5,881 $ 4,249 Chipset, motherboard and other revenue 1,761 1,877 1,112 7,674 7,758 5,361 Data centre Group Microprocessor revenue 1,552 1,703 1,012 Chipset, motherboard and other revenue 319 323 252 1,871 2,026 1,264 Other Intel Architecture groups 375 410 326 Intel Architecture group revenue 9,920 10,194 6,951 Other operating groups 369 367 149 Corporate 10 8 45 TOTAL NET REVENUE $ 10,299 $ 10,569 $ 7,145 Operating income (loss) PC Client Group $ 3,143 $ 3,340 $ 701 Data centre Group 835 972 266 Other Intel Architecture groups (29) 12 (76) Intel Architecture group operating income 3,949 4,324 891 Other operating groups (21) (22) (153) Corporate (480) (1,805) (91) TOTAL OPERATING INCOME $ 3,448 $ 2,497 $ 647 INTEL CORPORATION SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS In addition to disclosing financial results calculated in accordance with United States (U.S.) generally accepted accounting principles (GAAP), this earnings release contains non-GAAP financial measures that exclude the charge incurred in the fourth quarter of 2009 as a result of the settlement agreement with Advanced Micro Devices, Inc. (AMD) in the amount of $1.25 billion. These non-GAAP measures also exclude the associated impacts of the AMD settlement on our tax provision. The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations from these results should be carefully evaluated. Management believes the non-GAAP financial measures are appropriate for both its own assessment of, and to show the reader, how our performance compares to other periods. Set forth below are reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. (In millions, except per-share amounts) Three Months Ended March 27, Dec. 26, March 28, 2010 2009 2009 GAAP OPERATING INCOME $ 3,448 $ 2,497 $ 647 Adjustment for AMD settlement: – 1,250 – OPERATING INCOME EXCLUDING AMD SETTLEMENT $ 3,448 $ 3,747 $ 647 GAAP NET INCOME $ 2,442 $ 2,282 $ 629 Adjustment for: AMD settlement – 1,250 – Income tax impacts – (438 ) – NET INCOME EXCLUDING AMD SETTLEMENT $ 2,442 $ 3,094 $ 629 GAAP DILUTED EARNINGS PER COMMON SHARE $ 0.43 $ 0.40 $ 0.11 Adjustment for: AMD settlement – 0.22 – Income tax impacts – (0.07 ) – DILUTED EARNINGS PER COMMON SHARE EXCLUDING AMD SETTLEMENT $ 0.43 $ 0.55 $ 0.11
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