Quarterly report pursuant to Section 13 or 15(d)

Operating Segments

v3.19.2
Operating Segments
6 Months Ended
Jun. 29, 2019
Segment Reporting [Abstract]  
Operating Segments [Text Block]
NOTE 3 :
OPERATING SEGMENTS

We manage our business through the following operating segments:
Client Computing Group (CCG)
Data Center Group (DCG)
Internet of Things Group (IOTG)
Mobileye
Non-Volatile Memory Solutions Group (NSG)
Programmable Solutions Group (PSG)
All Other
We offer platform products that incorporate various components and technologies, including a microprocessor and chipset, a stand-alone SoC, or a multichip package. A platform product may be enhanced by additional hardware, software, and services offered by Intel. Platform products are used in various form factors across our CCG, DCG, and IOTG operating segments. We derive a substantial majority of our revenue from platform products, which are our principal products and considered as one class of product.
CCG and DCG are our reportable operating segments. IOTG, Mobileye, NSG, and PSG do not meet the quantitative thresholds to qualify as reportable operating segments; however, we have elected to disclose the results of these non-reportable operating segments. Our Internet of Things portfolio, presented as Internet of Things, is comprised of IOTG and Mobileye operating segments.
The “all other” category includes revenue, expenses, and charges such as:
results of operations from non-reportable segments not otherwise presented;
historical results of operations from divested businesses;
results of operations of start-up businesses that support our initiatives, including our foundry business;
amounts included within restructuring and other charges;
a portion of employee benefits, compensation, and other expenses not allocated to the operating segments; and
acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill.
The Chief Operating Decision Maker (CODM), which is our Chief Executive Officer (CEO), does not evaluate operating segments using discrete asset information. Operating segments do not record inter-segment revenue. We do not allocate gains and losses from equity investments, interest and other income, or taxes to operating segments. Although the CODM uses operating income to evaluate the segments, operating costs included in one segment may benefit other segments. Except for these differences, the accounting policies for segment reporting are the same as for Intel as a whole.


Net revenue and operating income (loss) for each period were as follows:
 
 
Three Months Ended
 
Six Months Ended
(In Millions)
 
Jun 29,
2019
 
Jun 30,
2018
 
Jun 29,
2019
 
Jun 30,
2018
Net revenue:
 
 
 
 
 
 
 
 
Client Computing Group
 
 
 
 
 
 
 
 
Platform
 
$
7,925

 
$
8,065

 
$
15,749

 
$
15,680

Adjacent
 
916

 
663

 
1,678

 
1,268

 
 
8,841

 
8,728

 
17,427

 
16,948

Data Center Group
 
 
 
 
 
 
 
 
Platform
 
4,553

 
5,100

 
9,035

 
9,924

Adjacent
 
430

 
449

 
850

 
859

 
 
4,983

 
5,549

 
9,885

 
10,783

Internet of Things
 
 
 
 
 
 
 
 
IOTG
 
986

 
880

 
1,896

 
1,720

Mobileye
 
201

 
173

 
410

 
324

 
 
1,187

 
1,053

 
2,306

 
2,044

 
 
 
 
 
 
 
 
 
Non-Volatile Memory Solutions Group
 
940

 
1,079

 
1,855

 
2,119

Programmable Solutions Group
 
489

 
517

 
975

 
1,015

All other
 
65

 
36

 
118

 
119

Total net revenue
 
$
16,505

 
$
16,962

 
$
32,566

 
$
33,028

 
 
 
 
 
 
 
 
 
Operating income (loss):
 
 
 
 
 
 
 
 
Client Computing Group
 
$
3,737

 
$
3,234

 
$
6,809

 
$
6,025

Data Center Group
 
1,800

 
2,737

 
3,641

 
5,339

 
 
 
 
 
 
 
 
 
Internet of Things
 
 
 
 
 
 
 
 
IOTG
 
294

 
243

 
545

 
470

Mobileye
 
53

 
44

 
121

 
54

 
 
347

 
287

 
666

 
524

 
 
 
 
 
 
 
 
 
Non-Volatile Memory Solutions Group
 
(284
)
 
(65
)
 
(581
)
 
(146
)
Programmable Solutions Group
 
52

 
101

 
141

 
198

All other
 
(1,035
)
 
(1,021
)
 
(1,885
)
 
(2,197
)
Total operating income
 
$
4,617

 
$
5,273

 
$
8,791

 
$
9,743


Disaggregated net revenue for each period was as follows:
 
 
Three Months Ended
 
Six Months Ended
(In Millions)
 
Jun 29,
2019
 
Jun 30,
2018
 
Jun 29,
2019
 
Jun 30,
2018
Platform revenue
 
 
 
 
 
 
 
 
Desktop platform
 
$
2,767

 
$
2,954

 
$
5,653

 
$
5,861

Notebook platform
 
5,136

 
5,086

 
10,063

 
9,775

DCG platform
 
4,553

 
5,100

 
9,035

 
9,924

IOTG platform
 
891

 
745

 
1,716

 
1,464

Other platform1
 
22

 
25

 
33

 
44

 
 
13,369

 
13,910

 
26,500

 
27,068

 
 
 
 
 
 
 
 
 
Adjacent revenue2
 
3,136

 
3,052

 
6,066

 
5,960

Total revenue
 
$
16,505

 
$
16,962

 
$
32,566

 
$
33,028


1 
Includes our tablet and service provider revenue.
2 
Includes all of our non-platform products for CCG, DCG, and IOTG such as modem, Ethernet, and silicon photonics, as well as Mobileye, NSG, and PSG products.
Planned divestiture of smartphone modem business
On July 25, 2019, we signed a definitive agreement to sell the majority of our smartphone modem business. We will continue to meet current customer commitments for our existing 4G smartphone modem product line. We expect to close the transaction, which will include certain employees, intellectual property, equipment and leases, in the fourth quarter of 2019. We expect to record a gain on divestiture of approximately $500 million, net of tax.