Intel Corporation 2200 Mission College Blvd. Santa Clara, CA 95054-1549 | ![]() |
• | Revenue of $59.4B was up $4.0B (+7%) from $55.4B |
• | Gross margin of 60.9% was down 1.7 points from 62.6% |
• | Operating income of $12.9B was down $1.1B (-8%) from $14.0B |
• | Net income of $10.3B was down $1.1B (-10%) from $11.4B |
• | Earnings per share of $2.12 was down 21 cents (-9%) from $2.33 |
• | Revenue of $16.4B was up $1.5B (+10%) from $14.9B |
• | Gross margin of 61.7% was down 2.6 points from 64.3% |
• | Operating income of $4.5B was up $0.2B (+5%) from $4.3B |
• | Net income of $3.6B was down $0.1B (-1%) from $3.6B |
• | Earnings per share of $0.73 was down 1 cent (-1%) from $0.74 |
• | Non-GAAP revenue of $59.5B, up $4.1B (+7%) from $55.4B |
• | Non-GAAP gross margin of 63.2%, down 0.1 point from 63.3% |
• | Non-GAAP operating income of $16.5B, up $1.6B (+11%) from $15.0B |
• | Non-GAAP net income of $13.2B, up $1.0B (+9%) from $12.2B |
• | Non-GAAP earnings per share of $2.72, up 23 cents (+9%) from $2.49 |
• | Non-GAAP revenue of $16.4B, up $1.5B (+10%) from $14.9B |
• | Non-GAAP gross margin of 63.1%, down 1.7 points from 64.8% |
• | Non-GAAP operating income of $4.9B, up $0.5B (+11%) from $4.4B |
• | Non-GAAP net income of $3.9B, up $0.1B (+4%) from $3.7B |
• | Non-GAAP earnings per share of $0.79, up 3 cents (+4%) from $0.76 |
• | Client Computing Group had revenue of $9.1B, up 4% with platform volumes down 7% and platform average selling prices up 7%. Desktop platform volumes were down 9% and desktop platform average selling prices were up 2%. Notebook platform volumes were flat and notebook platform average selling prices were up 3%. |
• | Data Center Group had revenue of $4.7B, up 8% with platform volumes up 3% and platform average selling prices up 4%. |
• | Internet of Things Group had revenue of $726M, up 16%. |
• | Non-Volatile Memory Solutions Group had revenue of $816M, up 25%. |
• | Intel Security Group had revenue of $550M, up 7%. |
• | Programmable Solutions Group had revenue of $420M. |
• | Client Computing Group revenue was up 3% with platform volumes down 4% and platform average selling prices up 6%. |
• | Data Center Group revenue was up 3% with platform volumes down 3% and platform average selling prices up 6%. |
• | Internet of Things Group revenue was up 5%. |
• | Non-Volatile Memory Solutions Group revenue was up 26%. |
• | Intel Security Group revenue was up 2%. |
• | Programmable Solutions Group revenue was down 1%. |
• | p Question - Asp - higher tablet mix - |
• | Gross margin of 61.7% was down 2.6 points compared to the fourth quarter 2015. |
• | Non-GAAP gross margin of 63.1% was down 1.7 points compared to the fourth quarter 2015. |
• | Gross margin of 61.7% was down 1.6 points compared to the third quarter. |
• | Non-GAAP gross margin of 63.1% was down 1.7 points compared to the third quarter. |
• | Gross margin of 61.7% was up 0.7 point compared to the expectation of 61%. |
• | Non-GAAP gross margin of 63.1% was up 0.1 point compared to the expectation of 63%. |
• | Depreciation was $1.6B. |
• | Amortization of acquisition-related intangibles included in operating expense was $41M, all of which is excluded on a non-GAAP basis. |
• | Restructuring and other charges were $100M, all of which is excluded on a non-GAAP basis. |
• | Gains and losses on equity investments and interest and other income was an $86M net loss. |
• | The effective tax rate for the fourth quarter was 19.8%, up 3.8 points on a year-on-year basis. This was primarily driven by the reenactment of the R&D tax credit which resulted in recognizing the full-year 2015 R&D benefit entirely in fourth quarter 2015. |
• | The total number of employees was at 106K, flat to the third quarter. |
• | Diluted shares outstanding was flat to the third quarter and on a year-on-year basis. |
• | The Client Computing Group had revenue of $32.9B, up 2% with platform volume down 10% and platform average selling prices up 11%. Desktop platform volume was down 6% and desktop platform average selling prices were up 2%. Notebook platform volume was down 1% and notebook platform average selling prices were up 2%. |
• | The Data Center Group had revenue of $17.2B, up 8% with platform volume up 8% and platform average selling prices down 1%. |
• | Internet of Things Group had revenue of $2.6B, up 15%. |
• | Non-Volatile Memory Solutions Group had revenue of $2.6B, down 1%. |
• | Intel Security Group had revenue of $2.2B, up 9%. |
• | Programmable Solutions Group had revenue of $1.7B. |
• | Gross margin dollars were $36.2B, up $1.5B from 2015. Gross margin of 60.9% was down 1.7 points from 2015. |
• | Non-GAAP gross margin dollars were $37.6B, up $2.6B from 2015. Gross margin of 63.2% was down 0.1 points from 2015. |
• | Spending in 2016 for R&D and MG&A was $21.1 billion, up 5% from a year ago. |
• | Non-GAAP spending for 2016 for R&D and MG&A was $21.0 billion, up 5% from a year ago. |
• | Depreciation was $6.3 billion. |
• | Amortization of acquisition-related intangibles included in operating expense was $294 million, all of which is excluded on a non-GAAP basis. |
• | Restructuring and other charges were $1.9 billion, all of which is excluded on a non-GAAP basis. |
• | The effective tax rate for 2016 was 20.3%, up 0.7 points from 2015. |
• | GAAP gross margin in the first quarter is expected to be 62%, plus or minus a couple of points, flat to the fourth quarter. |
• | Non-GAAP gross margin in the first quarter is expected to be 63%, plus or minus a couple of points, flat to the fourth quarter. |
• | Depreciation is forecast to be approximately $1.6B. |
• | Amortization of acquisition-related intangibles included in operating expenses is expected to be approximately $40M, all of which is excluded on a non-GAAP basis. |
• | Restructuring and other charges is expected to be $300 million, all of which is excluded on a non-GAAP basis. |
• | Gains and losses from equity investments and interest and other income are expected to result in a net loss of approximately $50M. |
• | The tax rate is expected to be approximately 22%. |
• | GAAP gross margin for the year is expected to be 62%, plus or minus a couple points, up 1.1 points from 2016. |
• | Non-GAAP gross margin for the year is expected to be 63%, plus or minus a couple points, flat to 2016. |
• | Depreciation is forecast to be approximately $7.0B plus or minus $200M, up $0.7B from 2016. |
• | Amortization of acquisition-related intangibles included in operating expense is forecast to be approximately $150M, down from 2016. |
• | Restructuring and other charges are expected to be $2.3 billion consistent with previous expectations. $1.9 billion of our restructuring and other charges were realized in 2016. |
• | The tax rate is expected to be 26%, up from 2016. Non-GAAP tax rate is expected to be 22%. |
• | Demand for Intel's products is highly variable and could differ from expectations due to factors including changes in business and economic conditions; consumer confidence or income levels; the introduction, availability and market acceptance of Intel's products, products used together with Intel products and competitors' products; competitive and pricing pressures, including actions taken by competitors; supply constraints and other disruptions affecting customers; changes in customer order patterns including order cancellations; and changes in the level of inventory at customers. |
• | Intel's gross margin percentage could vary significantly from expectations based on capacity utilization; variations in inventory valuation, including variations related to the timing of qualifying products for sale; changes in revenue levels; segment product mix; the timing and execution of the manufacturing ramp and associated costs; excess or obsolete inventory; changes in unit costs; defects or disruptions in the supply of materials or resources; and product manufacturing quality/yields. Variations in gross margin may also be caused by the timing of Intel product introductions and related expenses, including marketing expenses, and Intel's ability to respond quickly to technological developments and to introduce new products or incorporate new features into existing products, which may result in restructuring and asset impairment charges. |
• | Intel's results could be affected 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, fluctuations in currency exchange rates, sanctions and tariffs, and the United Kingdom referendum to withdraw from the European Union. Results may also be affected by the formal or informal imposition by countries of new or revised export and/or import and doing-business regulations, which could be changed without prior notice. |
• | Intel operates in highly competitive industries and its operations have high costs that are either fixed or difficult to reduce in the short term. |
• | The amount, timing and execution of Intel's stock repurchase program could be affected by changes in Intel's priorities for the use of cash, such as operational spending, capital spending, acquisitions, and as a result of changes to Intel's cash flows or changes in tax laws. |
• | Intel's expected tax rate is based on current tax law and current expected income and 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 realize deferred tax assets. |
• | Gains or losses from equity securities and interest and other could vary from expectations depending on gains or losses on the sale, exchange, change in the fair value or impairments of debt and equity investments, interest rates, cash balances, and changes in fair value of derivative instruments. |
• | Product defects or errata (deviations from published specifications) may adversely impact our expenses, revenues and reputation. |
• | Intel's results could be affected by litigation or regulatory matters involving intellectual property, stockholder, consumer, antitrust, disclosure and other issues. An unfavorable ruling could include monetary damages or an injunction prohibiting Intel from manufacturing or selling one or more products, precluding particular business practices, impacting Intel's ability to design its products, or requiring other remedies such as compulsory licensing of intellectual property. |
• | Intel’s results may be affected by factors that could cause the implementation of, and expected results from, the restructuring plan announced on April 19, 2016, to differ from Intel’s expectations. A detailed description of risks associated with the restructuring plan and factors that could cause actual results of the restructuring plan to differ is set forth in the “Forward Looking Statements” section of Intel’s press release entitled “Intel Announces Restructuring Initiative to Accelerate Transformation” dated April 19, 2016, which risk factors are incorporated by reference herein. |
• | Intel's results may be affected by the timing of closing of acquisitions, divestitures and other significant transactions. In addition, risks associated with our planned divestiture of the Intel Security Group are described in the “Forward Looking Statements” section of Intel’s press release entitled "Intel and TPG to Collaborate to Establish McAfee as Leading Independent Cybersecurity Company Valued at $4.2 Billion" dated September 7, 2016, which risk factors are incorporated by reference herein. |
• | Revenue and gross margin: Non-GAAP financial measures exclude the impact of the deferred revenue write-down, amortization of acquisition-related intangible assets that impact cost of sales, and the inventory valuation adjustment. |
◦ | Deferred revenue write-down: Sales to distributors are made under agreements allowing for subsequent price adjustments and returns and are deferred until the products are resold by the distributor. Business combination accounting principles require us to write down to fair value the deferred revenue assumed in our acquisitions as we have limited performance obligations associated with this deferred revenue. Our GAAP revenues and related cost of sales for the subsequent reselling by distributors to end customers after an acquisition do not reflect the full amounts that would have been reported if the acquired deferred revenue was not written down to fair value. The non-GAAP adjustments made in the first quarter of 2016 eliminate the effect of the deferred revenue write-down associated with our acquisition of Altera. We believe these adjustments are useful to investors as an additional means to reflect revenue and gross margin trends of our business. |
◦ | Inventory valuation adjustment: Business combination accounting principles require us to measure acquired inventory at fair value. The fair value of inventory reflects the acquired company’s cost of manufacturing plus a portion of the expected profit margin. The non-GAAP adjustments to our cost of sales in the first half of 2016 exclude the expected profit margin component that is recorded under business combination accounting principles associated with our acquisition of Altera. We believe the adjustments are useful to investors as an additional means to reflect cost of sales and gross margin trends of our business. |
• | Amortization of acquisition-related intangible assets: Amortization of acquisition-related intangible assets consists of amortization of intangibles assets such as developed technology, trade names, and customer relationships acquired in connection with business combinations. We record charges relating to the amortization of these intangibles within both cost of sales and operating expenses in our GAAP financial statements. Amortization charges for our acquisition-related intangible assets are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. Consequently, our non-GAAP adjustments exclude these charges to facilitate an evaluation of our current operating performance and comparisons to our past operating performance. |
• | R&D plus MG&A spending: Non-GAAP R&D plus MG&A spending excludes the impact of other charges associated with the acquisition of Altera, which primarily includes bankers fees, compensation-related costs, and valuation charges for Altera's stock based compensation incurred in the first quarter of 2016. |
Q1 2017 Outlook | 2017 Outlook | |||||||||
GAAP GROSS MARGIN PERCENTAGE | 62 | % | +/- a couple pct. pts. | 62 | % | +/- a couple pct. pts. | ||||
Adjustment for amortization of acquisition-related intangibles | 1 | % | 1 | % | ||||||
NON-GAAP GROSS MARGIN PERCENTAGE | 63 | % | +/- a couple pct. pts. | 63 | % | +/- a couple pct. pts. | ||||
GAAP RESTRUCTURING AND OTHER CHARGES ($ in Millions) | $ | 300 | approximately | $ | 400 | approximately | ||||
Adjustment for restructuring and other charges | (300 | ) | (400 | ) | ||||||
NON-GAAP RESTRUCTURING AND OTHER CHARGES | $ | — | $ | — | ||||||
GAAP AMORTIZATION OF ACQUISITION-RELATED INTANGIBLES IN OPERATING EXPENSES ($ in Millions) | $ | 40 | approximately | $ | 150 | approximately | ||||
Adjustment for amortization of acquisition-related intangibles | (40 | ) | (150 | ) | ||||||
NON-GAAP AMORTIZATION OF ACQUISITION-RELATED INTANGIBLES IN OPERATING EXPENSES | $ | — | $ | — | ||||||
GAAP OPERATING INCOME ($ in Billions) | $ | 3.6 | approximately | $ | 15.7 | approximately | ||||
Adjustment for restructuring and other charges | 0.3 | 0.4 | ||||||||
Adjustment for amortization of acquisition-related intangibles | 0.2 | 1.0 | ||||||||
NON-GAAP OPERATING INCOME | $ | 4.1 | approximately | $ | 17.1 | approximately | ||||
GAAP TAX RATE | 26 | % | approximately | |||||||
Adjustment for planned divestiture of Intel Security | (4 | )% | ||||||||
NON-GAAP TAX RATE | 22 | % | approximately | |||||||
GAAP EARNINGS PER SHARE | $ | 0.56 | +/- 5 cents | $ | 2.53 | +/- 5% | ||||
Adjustment for restructuring and other charges | $ | 0.06 | $ | 0.08 | ||||||
Adjustment for amortization of acquisition-related intangibles | $ | 0.05 | $ | 0.19 | ||||||
(Gains) losses from divestiture | $ | (0.08 | ) | |||||||
Income tax effect | $ | (0.02 | ) | $ | 0.08 | |||||
NON-GAAP EARNINGS PER SHARE | $ | 0.65 | +/- 5 cents | $ | 2.80 | +/- 5% |
Three Months Ended | Twelve Months Ended | |||||||||||||
($ in Millions, except per share amounts) | Dec 31, 2016 | Oct 1, 2016 | Dec 26, 2015 | Dec 31, 2016 | Dec 26, 2015 | |||||||||
GAAP NET REVENUE | 16,374 | 15,778 | 14,914 | 59,387 | 55,355 | |||||||||
Deferred revenue write-down | — | — | — | 99 | — | |||||||||
NON-GAAP NET REVENUE | 16,374 | 15,778 | 14,914 | 59,486 | 55,355 | |||||||||
GAAP GROSS MARGIN | 10,105 | 9,983 | 9,590 | 36,191 | 34,679 | |||||||||
Deferred revenue write-down, net of cost of sales | — | — | — | 64 | — | |||||||||
Inventory valuation | — | — | — | 387 | — | |||||||||
Amortization of acquisition-related intangibles | 232 | 235 | 72 | 937 | 343 | |||||||||
NON-GAAP GROSS MARGIN | 10,337 | 10,218 | 9,662 | 37,579 | 35,022 | |||||||||
GAAP GROSS MARGIN PERCENTAGE | 61.7 | % | 63.3 | % | 64.3 | % | 60.9 | % | 62.6 | % | ||||
Deferred revenue write-down, net of cost of sales | — | % | — | % | — | % | — | % | — | % | ||||
Inventory valuation | — | % | — | % | — | % | 0.7 | % | — | % | ||||
Amortization of acquisition-related intangibles | 1.4 | % | 1.5 | % | 0.5 | % | 1.6 | % | 0.7 | % | ||||
NON-GAAP GROSS MARGIN PERCENTAGE | 63.1 | % | 64.8 | % | 64.8 | % | 63.2 | % | 63.3 | % | ||||
GAAP R&D plus MG&A SPENDING | 5,438 | 5,075 | 5,237 | 21,137 | 20,058 | |||||||||
Other acquisition-related charges | — | — | — | (100 | ) | — | ||||||||
NON-GAAP R&D plus MG&A SPENDING | 5,438 | 5,075 | 5,237 | 21,037 | 20,058 | |||||||||
GAAP OPERATING INCOME | 4,526 | 4,462 | 4,299 | 12,874 | 14,002 | |||||||||
Deferred revenue write-down, net of cost of sales | — | — | — | 64 | — | |||||||||
Inventory valuation | — | — | — | 387 | — | |||||||||
Amortization of acquisition-related intangibles | 273 | 309 | 139 | 1,231 | 608 | |||||||||
Restructuring and other charges | 100 | 372 | (13 | ) | 1,886 | 354 | ||||||||
Other acquisition-related charges | — | — | — | 100 | — | |||||||||
NON-GAAP OPERATING INCOME | 4,899 | 5,143 | 4,425 | 16,542 | 14,964 | |||||||||
GAAP NET INCOME | 3,562 | 3,378 | 3,613 | 10,316 | 11,420 | |||||||||
Deferred revenue write-down, net of cost of sales | — | — | — | 64 | — | |||||||||
Inventory valuation | — | — | — | 387 | — | |||||||||
Amortization of acquisition-related intangibles | 273 | 309 | 139 | 1,231 | 608 | |||||||||
Restructuring and other charges | 100 | 372 | (13 | ) | 1,886 | 354 | ||||||||
Other acquisition-related charges | — | — | — | 100 | — | |||||||||
Income tax effect | (70 | ) | (173 | ) | (12 | ) | (745 | ) | (189 | ) | ||||
NON-GAAP NET INCOME | 3,865 | 3,886 | 3,727 | 13,239 | 12,193 | |||||||||
GAAP DILUTED EARNINGS PER COMMON SHARE | 0.73 | 0.69 | 0.74 | 2.12 | 2.33 | |||||||||
Deferred revenue write-down, net of cost of sales | — | — | — | 0.01 | — | |||||||||
Inventory valuation | — | — | — | 0.08 | — | |||||||||
Amortization of acquisition-related intangibles | 0.06 | 0.06 | 0.03 | 0.25 | 0.13 | |||||||||
Restructuring and other charges | 0.02 | 0.08 | (0.01 | ) | 0.39 | 0.07 | ||||||||
Other acquisition-related charges | — | — | — | 0.02 | — | |||||||||
Income tax effect | (0.02 | ) | (0.03 | ) | — | (0.15 | ) | (0.04 | ) | |||||
NON-GAAP DILUTED EARNINGS PER COMMON SHARE | 0.79 | 0.80 | 0.76 | 2.72 | 2.49 |