Intel Reports First $11 Billion Revenue Quarter

    --  Revenue $11.1 billion
    --  Gross Margin 66 percent
    --  Operating Income $4.1 billion
    --  Net Income $3.0 billion
    --  EPS 52 cents

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Intel Corporation today reported that third-quarter revenue exceeded $11 billion for the first time, up 18 percent year-over-year to $11.1 billion. The company reported operating income of $4.1 billion, net income of $3.0 billion and EPS of 52 cents.

"Intel's third-quarter results set all-time records for revenue and operating income," said Paul Otellini, Intel president and CEO. "These results were driven by solid demand from corporate customers, sales of our leadership products and continued growth in emerging markets. Looking forward, we continue to see healthy worldwide demand for computing products of all types and are particularly excited about our next-generation processor, codenamed Sandy Bridge, and the many new designs around our Intel(R) Atom(TM) processors in everything from the new Google TV* products to a wide array of tablets based on Windows*, Android* and MeeGo* operating systems."

Q3 2010 Highlights

    --  PC Client Group revenue was up 3 percent sequentially, with record
        mobile microprocessor revenue.
    --  Data Center Group revenue was up 3 percent sequentially, with record
        server microprocessor revenue.
    --  Intel Atom microprocessor and chipset revenue of $396 million, down 4
        percent sequentially.
    --  The average selling price (ASP) for microprocessors was approximately
        flat sequentially and up significantly year-over-year.
    --  Gross margin was 66 percent, consistent with the company's revised
        expectation of 65 to 67 percent.
    --  R&D plus MG&A spending was $3.2 billion, consistent with the company's
        expectation.
    --  The net gain from equity investments and interest and other was $115
        million, lower than the company's revised expectation of $175 million.
    --  The effective tax rate was 30.5 percent, slightly below the company's
        expectation of approximately 32 percent.

Business Outlook

The Outlook for the fourth quarter does not include the effect of any acquisitions, divestitures or similar transactions that may be completed after Oct. 12.

Q4 2010

    --  Revenue: $11.4 billion, plus or minus $400 million.
    --  Gross margin: 67 percent, plus or minus a couple percentage points.
    --  R&D plus MG&A spending: Approximately $3.2 billion.
    --  Impact of equity investments and interest and other: Approximately $20
        million gain.
    --  Depreciation: Approximately $1.1 billion.
    --  Tax rate: Approximately 31 percent.
    --  Full-year capital spending: $5.2 billion, plus or minus $200 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 Nov. 24 until publication of the company's fourth-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.

Risk Factors

The above statements and any others in this document that refer to plans and expectations for the fourth 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
        characterized 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. Revenue and the gross margin percentage are
        affected by the timing of 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; 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 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.
    --  The majority of Intel's 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 Intel's 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 Intel's ability to
        design its 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-Q for the quarter ended June 26, 2010.

Earnings Webcast

Intel will hold a public webcast at 2:30 p.m. PDT today on its Investor Relations website 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 fourth quarter of 2010 on Thursday, Jan. 13, 2011. 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. PST at www.intc.com.

Intel (NASDAQ: INTC) is a world leader in computing innovation. The company designs and builds the essential technologies that serve as the foundation for the world's computing devices. Additional information about Intel is available at www.intel.com/pressroom and blogs.intel.com.

Intel, the Intel logo, 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    Nine Months Ended

                                     Sept. 25,  Sept. 26,  Sept. 25,  Sept. 26,

                                     2010       2009       2010       2009

NET REVENUE                          $ 11,102   $ 9,389    $ 32,166   $ 24,558

Cost of sales                          3,781      3,985      11,081     11,837

GROSS MARGIN                           7,321      5,404      21,085     12,721

Research and development               1,675      1,430      4,905      4,050

Marketing, general and                 1,506      1,320      4,604      5,213
administrative

R&D AND MG&A                           3,181      2,750      9,509      9,263

Restructuring and asset impairment     -          63         -          228
charges

Amortization of acquisition-related    4          12         11         16
intangibles

OPERATING EXPENSES                     3,185      2,825      9,520      9,507

OPERATING INCOME                       4,136      2,579      11,565     3,214

Gains (losses) on equity               77         (79)       239        (261)
investments, net

Interest and other, net                38         32         78         158

INCOME BEFORE TAXES                    4,251      2,532      11,882     3,111

Provision for taxes                    1,296      676        3,598      1,024

NET INCOME                           $ 2,955    $ 1,856    $ 8,284    $ 2,087

BASIC EARNINGS PER COMMON SHARE      $ 0.53     $ 0.34     $ 1.49     $ 0.37

DILUTED EARNINGS PER COMMON SHARE    $ 0.52     $ 0.33     $ 1.45     $ 0.37

WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:

 BASIC                                 5,575      5,537      5,556      5,568

 DILUTED                               5,694      5,616      5,695      5,643




INTEL CORPORATION

CONSOLIDATED SUMMARY BALANCE SHEET DATA

(In millions)

                                                 Sept. 25,  June 26,  Dec. 26,

                                                 2010       2010      2009

CURRENT ASSETS

 Cash and cash equivalents                       $ 5,517    $ 5,514   $ 3,987

 Short-term investments                            9,470      6,715     5,285

 Trading assets                                    5,763      6,074     4,648

 Accounts receivable, net                          2,911      2,430     2,273

 Inventories:

  Raw materials                                    380        407       437

  Work in process                                  1,634      1,637     1,469

  Finished goods                                   1,409      1,301     1,029

                                                   3,423      3,345     2,935

 Deferred tax assets                               1,233      1,206     1,216

 Other current assets                              1,182      1,180     813

TOTAL CURRENT ASSETS                               29,499     26,464    21,157

Property, plant and equipment, net                 17,189     16,946    17,225

Marketable equity securities                       1,054      916       773

Other long-term investments                        3,482      3,947     4,179

Goodwill                                           4,481      4,481     4,421

Other long-term assets                             4,883      4,937     5,340

 TOTAL ASSETS                                    $ 60,588   $ 57,691  $ 53,095

CURRENT LIABILITIES

 Short-term debt                                 $ 259      $ 215     $ 172

 Accounts payable                                  1,903      2,126     1,883

 Accrued compensation and benefits                 2,270      1,962     2,448

 Accrued advertising                               1,017      958       773

 Deferred income on shipments to distributors      626        582       593

 Income taxes payable                              -          -         86

 Other accrued liabilities                         2,762      2,094     1,636

TOTAL CURRENT LIABILITIES                          8,837      7,937     7,591

Long-term income taxes payable                     174        174       193

Long-term debt                                     2,073      2,058     2,049

Long-term deferred tax liabilities                 681        586       555

Other long-term liabilities                        1,127      1,095     1,003

Stockholders' equity:

 Preferred stock                                   -          -         -

 Common stock and capital in excess of par value   16,096     15,741    14,993

 Accumulated other comprehensive income (loss)     531        231       393

 Retained earnings                                 31,069     29,869    26,318

TOTAL STOCKHOLDERS' EQUITY                         47,696     45,841    41,704

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $ 60,588   $ 57,691  $ 53,095




INTEL CORPORATION

SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION

(In millions)

                                                   Q3 2010   Q2 2010   Q3 2009

GEOGRAPHIC REVENUE:

 Asia-Pacific                                      $6,404    6,166     $5,322

                                                   58%       57%       57%

 Americas                                          $2,240    2,173     $1,822

                                                   20%       20%       19%

 Europe                                            $1,326    1,294     $1,328

                                                   12%       12%       14%

 Japan                                             $1,132    1,132     $917

                                                   10%       11%       10%

CASH INVESTMENTS:

Cash and short-term investments                    $14,987   $12,229   $9,259

Trading assets - marketable debt securities (1)    5,341     5,543     3,671

Total cash investments                             $20,328   $17,772   $12,930

TRADING ASSETS:

Trading assets - equity securities (2)             $422      $531      -

Total trading assets - sum of 1+2                  $5,763    $6,074    $3,671

SELECTED CASH FLOW INFORMATION:

Depreciation                                       $1,086    $1,086    $1,153

Share-based compensation                           $224      $232      $218

Amortization of intangibles                        $56       $63       $82

Capital spending                                   ($1,362)  ($1,048)  ($944)

Investments in non-marketable equity instruments   ($73)     ($100)    ($41)

Stock repurchase program                           -         -         ($1,671)

Proceeds from sales of shares to employees, tax    $150      $218      $125
benefit & other

Dividends paid                                     ($877)    ($877)    ($771)

Net cash received/(used) for                       -         ($33)     ($853)
divestitures/acquisitions

EARNINGS PER COMMON SHARE INFORMATION:

Weighted average common shares outstanding - basic 5,575     5,563     5,537

Dilutive effect of employee equity incentive plans 67        96        28

Dilutive effect of convertible debt                52        52        51

Weighted average common shares outstanding -       5,694     5,711     5,616
diluted

STOCK BUYBACK:

Shares repurchased                                 -         -         88

Cumulative shares repurchased (in billions)        3.4       3.4       3.4

Remaining dollars authorized for buyback (in       $5.7      $5.7      $5.7
billions)

OTHER INFORMATION:

Employees (in thousands)                           81.7      80.4      80.8




INTEL CORPORATION

SUPPLEMENTAL OPERATING GROUP RESULTS

($ in millions)

                                         Three Months Ended  Nine Months Ended

                                         Q3 2010   Q3 2009   Q3 2010   Q3 2009

Net Revenue

PC Client Group

 Microprocessor revenue                  $ 6,305   $ 5,217   $ 18,373  $ 14,033

 Chipset, motherboard and other revenue  1,750     1,840     5,195     4,384

                                         8,055     7,057     23,568    18,417

Data Center Group

 Microprocessor revenue                  1,847     1,378     5,196     3,598

 Chipset, motherboard and other revenue  339       298       975       826

                                         2,186     1,676     6,171     4,424

Other Intel architecture group           495       338       1,287     992

Intel architecture group revenue         10,736    9,071     31,026    23,833

Other operating groups                   354       282       1,109     603

Corporate                                12        36        31        122

TOTAL NET REVENUE                        $ 11,102  $ 9,389   $ 32,166  $ 24,558

Operating income (loss)

PC Client Group                          $ 3,437   $ 2,247   $ 10,008  $ 4,245

Data Center Group                        1,070     627       2,969     1,327

Other Intel architecture group           -         (55)      (47)      (191)

Intel architecture group operating       4,507     2,819     12,930    5,381
income

Other operating groups                   (42)      (74)      (84)      (262)

Corporate                                (329)     (166)     (1,281)   (1,905)

TOTAL OPERATING INCOME                   $ 4,136   $ 2,579   $ 11,565  $ 3,214




    Source: Intel Corporation