Intel Posts Record Third-Quarter Revenue of $10.2 Billion
-- Revenue up 8 Percent Sequentially
-- Gross Margin 59 Percent; Operating Margin 30 Percent
-- Operating Income of $3.1 Billion up 37 Percent Sequentially
-- Net Income $2 Billion
-- EPS 35 Cents
SANTA CLARA, Calif.--(BUSINESS WIRE)--
Intel Corporation today announced record third-quarter revenue of $10.2 billion along with operating income of $3.1 billion, net income of $2 billion and earnings per share (EPS) of 35 cents.
"Intel delivered the best third-quarter revenue in its history," said Paul Otellini, Intel president and CEO. "We were solidly profitable, with operating income of over $3 billion, reflecting strong across-the-board execution and best-of-class products."
"As we look to Q4, it is hard to know what impact the financial crisis will have on end customer demand. We are confident that our product portfolio, strong cash flow, commitment to deploying new technology and market momentum will allow us to outpace peer companies at a time when business levels are difficult to predict."
Q3 2008 vs. Q3 2007 vs. Q2 2008
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Revenue $10.2 billion +1% +8%
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Operating Income $3.1 billion +44% +37%
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Net Income $2 billion +12% +26%
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EPS 35 cents +17% +25%
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Q3 2008 results included an impairment of the Numonyx investment that
net of tax benefits resulted in a $162-million charge. Q3 2007
results included $125 million in restructuring and asset impairment
charges; the results also included significantly higher revenue from
divested businesses such as NOR flash and cellular baseband products.
Q2 2008 results included $96 million in restructuring charges.
----------------------------------------------------------------------
Key Financial Information
-- Microprocessor and chipset units both set records.
-- Revenue from Intel(R) Atom(TM) microprocessors and chipsets
into the new netbook and nettop segments was approximately
$200 million.
-- The total microprocessor average selling price (ASP) was lower
sequentially.
-- Excluding shipments of Intel Atom microprocessors, the ASP was
flat.
-- Gross margin of 58.9 percent was up from 55.4 percent in the
second quarter. The increase was driven primarily by lower
microprocessor unit costs and higher microprocessor revenue.
-- The net loss from equity investments and interest and other
was $265 million, greater than the expected net loss of $30
million, primarily driven by a $250-million impairment of the
company's investment in Numonyx.
-- The effective tax rate was 28.9 percent, lower than the
expectation of approximately 33 percent.
-- The company used $2.1 billion to repurchase 93 million shares
of its common stock.
Business Outlook
Intel's Business Outlook does not include the potential impact of any mergers, acquisitions, divestitures or other business combinations that may be completed after Oct. 13. Current uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters and makes it more likely that Intel's actual results could differ materially from expectations.
Q4 2008:
-- Revenue: Between $10.1 billion and $10.9 billion.
-- Gross margin: 59 percent plus or minus a couple of points.
-- Spending (R&D plus MG&A): Approximately $2.9 billion.
-- Restructuring and asset impairment charges: Approximately $250
million. The expected charges are primarily driven by the
decision by Intel and Micron to discontinue the supply of NAND
flash memory from a 200mm facility within the IMFT
manufacturing network.
-- Net gain or loss from equity investments and interest and
other: Net loss of approximately $50 million.
-- Tax rate: Approximately 29 percent, lower than the previous
expectation of approximately 33 percent.
-- Depreciation: Approximately $1.1 billion.
Full-Year 2008:
-- Spending (R&D plus MG&A): Approximately $11.5 billion, lower
than the previous expectation of approximately $11.7 billion
dollars.
-- R&D: Approximately $5.9 billion, lower than the previous
expectation of approximately $6 billion.
-- Capital spending: $5 billion plus or minus $100 million, as
compared to the previous expectation of $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. Due to the uncertain economic environment, Intel intends to publish a mid-quarter business update this quarter. From the close of business on Nov. 28 until publication of the mid-quarter update on Dec. 4, Intel will observe a "Quiet Period" during which the Business Outlook disclosed in the company's press releases and filings with the SEC should be considered to be 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.
-- Current uncertainty in global economic conditions pose a risk
to the overall economy as consumers and businesses may defer
purchases in response to tighter credit and negative financial
news, which could negatively affect product demand and other
related matters. Consequently, demand could be different from
Intel's expectations due to factors including changes in
business and economic conditions, including conditions in the
credit market that could affect consumer confidence; 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's results could be affected by the timing of closing of
acquisitions and divestitures.
-- 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 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; Intel's ability to respond quickly to
technological developments and to incorporate new features
into its products; and the availability of sufficient supply
of components from suppliers to meet demand.
-- The gross margin percentage could vary significantly from
expectations based on changes in revenue levels; product mix
and pricing; capacity utilization; 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; and the timing and execution of the
manufacturing ramp and associated costs, including start-up
costs.
-- Expenses, particularly certain marketing and compensation
expenses, vary depending on the level of demand for Intel's
products, the level of revenue and profits, and impairments of
long-lived assets.
-- Intel is in the midst of a structure and efficiency program
that is resulting in several actions that could have an impact
on expected expense levels and gross margin.
-- 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.
-- The recent financial crisis affecting the banking system and
financial markets and the going concern threats to investment
banks and other financial institutions have resulted in a
tightening in the credit markets, a low level of liquidity in
many financial markets, and extreme volatility in fixed
income, credit and equity markets. There could be a number of
follow-on effects from the credit crisis on Intel's business,
including insolvency of key suppliers resulting in product
delays; inability of customers to obtain credit to finance
purchases of our products and/or customer insolvencies;
counterparty failures negatively impacting our treasury
operations; increased expense or inability to obtain
short-term financing of Intel's operations from the issuance
of commercial paper; and increased impairments from the
inability of investee companies to obtain financing. Gains or
losses from equity securities and interest and other could
also vary from expectations depending on gains or losses
realized 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 current volatility
in the financial markets and overall economic uncertainty
increases the risk that the actual amounts realized in the
future on our debt and equity investments will differ
significantly from the fair values currently assigned to them.
-- 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 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 the
countries in which 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 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.
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 28, 2008.
Earnings Webcast
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 audio download will also be made available on the site.
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
INTC/IR
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 INCOME STATEMENT DATA
(In millions, except per share amounts)
Three Months Ended Nine Months Ended
--------------------- ---------------------
Sept. 27, Sept. 29, Sept. 27, Sept. 29,
2008 2007 2008 2007
---------- ---------- ---------- ----------
NET REVENUE $ 10,217 $ 10,090 $ 29,360 $ 27,622
Cost of sales 4,198 4,919 12,885 13,944
---------- ---------- ---------- ----------
GROSS MARGIN 6,019 5,171 16,475 13,678
---------- ---------- ---------- ----------
Research and development 1,471 1,521 4,406 4,274
Marketing, general and
administrative 1,416 1,381 4,195 3,953
Restructuring and asset
impairment charges 34 125 459 282
---------- ---------- ---------- ----------
OPERATING EXPENSES 2,921 3,027 9,060 8,509
---------- ---------- ---------- ----------
OPERATING INCOME 3,098 2,144 7,415 5,169
Gains (losses) on equity
investments, net (396) 148 (564) 176
Interest and other, net 131 211 466 560
---------- ---------- ---------- ----------
INCOME BEFORE TAXES 2,833 2,503 7,317 5,905
Provision for taxes 819 712 2,259 1,200
---------- ---------- ---------- ----------
NET INCOME $ 2,014 $ 1,791 $ 5,058 $ 4,705
========== ========== ========== ==========
BASIC EARNINGS PER COMMON
SHARE $ 0.36 $ 0.31 $ 0.89 $ 0.81
========== ========== ========== ==========
DILUTED EARNINGS PER
COMMON SHARE $ 0.35 $ 0.30 $ 0.87 $ 0.79
========== ========== ========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING:
BASIC 5,603 5,837 5,696 5,808
DILUTED 5,692 5,967 5,790 5,919
INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions)
Sept. 27, Jun. 28, Dec. 29,
2008 2008 2007
---------- ---------- ----------
CURRENT ASSETS
Cash and cash equivalents $ 3,854 $ 4,079 $ 7,307
Short-term investments 4,433 4,312 5,490
Trading assets 3,917 3,570 2,566
Accounts receivable, net 2,782 2,399 2,576
Inventories:
Raw materials 583 580 507
Work in process 1,427 1,355 1,460
Finished goods 1,388 1,330 1,403
---------- ---------- ----------
3,398 3,265 3,370
Deferred tax assets 1,430 1,209 1,186
Other current assets 1,609 944 1,390
---------- ---------- ----------
TOTAL CURRENT ASSETS 21,423 19,778 23,885
---------- ---------- ----------
Property, plant and equipment, net 17,026 16,723 16,918
Marketable equity securities 401 644 987
Other long-term investments 3,820 4,651 4,398
Goodwill 3,924 3,915 3,916
Other long-term assets 6,125 6,681 5,547
---------- ---------- ----------
TOTAL ASSETS $ 52,719 $ 52,392 $ 55,651
========== ========== ==========
CURRENT LIABILITIES
Short-term debt $ 467 $ 175 $ 142
Accounts payable 2,507 2,379 2,361
Accrued compensation and benefits 1,858 1,658 2,417
Accrued advertising 882 787 749
Deferred income on shipments to
distributors 656 665 625
Other accrued liabilities 3,698 2,368 1,938
Income taxes payable - - 339
---------- ---------- ----------
TOTAL CURRENT LIABILITIES 10,068 8,032 8,571
---------- ---------- ----------
Long-term income taxes payable 782 760 785
Deferred tax liabilities 36 171 411
Long-term debt 1,889 1,892 1,980
Other long-term liabilities 1,033 1,176 1,142
Stockholders' equity:
Preferred stock - - -
Common stock and capital in excess of
par value 12,744 12,452 11,653
Accumulated other comprehensive
income (loss) (136) 129 261
Retained earnings 26,303 27,780 30,848
---------- ---------- ----------
TOTAL STOCKHOLDERS' EQUITY 38,911 40,361 42,762
---------- ---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 52,719 $ 52,392 $ 55,651
========== ========== ==========
INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
(In millions)
Q3 2008 Q2 2008 Q3 2007
-------- -------- --------
GEOGRAPHIC REVENUE:
Asia-Pacific $5,389 $4,805 $5,205
53% 51% 52%
Americas $1,887 $1,985 $2,067
19% 21% 20%
Europe $1,883 $1,741 $1,824
18% 18% 18%
Japan $1,058 $939 $994
10% 10% 10%
CASH INVESTMENTS:
Cash and short-term investments $8,287 $8,391 $10,796
Trading assets - marketable debt securities
(1) 3,508 3,127 1,732
-------- -------- --------
Total cash investments $11,795 $11,518 $12,528
TRADING ASSETS:
Trading assets - equity securities
offsetting deferred compensation (2) $409 $443 $493
Total trading assets - sum of 1+2 $3,917 $3,570 $2,225
SELECTED CASH FLOW INFORMATION:
Depreciation $1,059 $1,042 $1,098
Share-based compensation $197 $243 $227
Amortization of intangibles $68 $63 $65
Capital spending ($1,374) ($1,151) ($1,088)
Stock repurchase program ($2,117) ($2,500) ($750)
Proceeds from sales of shares to employees,
tax benefit & other $277 $381 $908
Dividends paid ($783) ($800) ($657)
Net cash received/(used) for
divestitures/acquisitions ($9) - ($42)
EARNINGS PER SHARE INFORMATION:
Weighted average common shares outstanding -
basic 5,603 5,699 5,837
Dilutive effect of employee equity incentive
plans 38 50 79
Dilutive effect of convertible debt 51 51 51
-------- -------- --------
Weighted average common shares outstanding -
diluted 5,692 5,800 5,967
STOCK BUYBACK:
Shares repurchased 93 109 30
Cumulative shares repurchased (in billions) 3.3 3.2 2.9
Remaining dollars authorized for buyback (in
billions) $7.4 $9.5 $16.0
OTHER INFORMATION:
Employees (in thousands) 83.5 81.8 88.1
INTEL CORPORATION
SUPPLEMENTAL OPERATING RESULTS AND OTHER INFORMATION
($ in millions)
Three Months Ended Nine Months Ended
-------------------------------------
OPERATING SEGMENT INFORMATION: Q3 2008 Q3 2007 Q3 2008 Q3 2007
----------------------------------------------------------------------
Digital Enterprise Group
Microprocessor revenue 4,069 4,106 12,413 11,456
Chipset, motherboard and other
revenue 1,249 1,406 3,719 3,887
Net revenue 5,318 5,512 16,132 15,343
Operating income 1,768 1,378 5,242 3,113
----------------------------------------------------------------------
Mobility Group
Microprocessor revenue 3,387 2,832 8,855 7,671
Chipset and other revenue 1,294 1,139 3,292 2,903
Net revenue 4,681 3,971 12,147 10,574
Operating income 1,849 1,294 4,265 3,928
----------------------------------------------------------------------
All Other
Net revenue 218 607 1,081 1,705
Operating loss (519) (528) (2,092) (1,872)
----------------------------------------------------------------------
Total
Net revenue 10,217 10,090 29,360 27,622
Operating income 3,098 2,144 7,415 5,169
Source: Intel Corporation
Released Oct 14, 2008 • 4:15 PM EDT