Intel Posts Record First Quarter Revenue of $9.7 Billion
-- Record Server Microprocessor Revenue
-- Revenue up 9 Percent Year-over-Year
-- Gross Margin up 4 Points Year-over-Year
-- Operating Income up 23 Percent Year-over-Year
-- Net Income $1.4 Billion; EPS 25 Cents
SANTA CLARA, Calif.--(BUSINESS WIRE)--
Intel Corporation today announced record first-quarter revenue of $9.7 billion, operating income of $2.1 billion, net income of $1.4 billion and earnings per share (EPS) of 25 cents.
"Our first quarter results demonstrate a strengthening core business and a solid global market environment," said Paul Otellini, Intel president and CEO. "We saw healthy demand for our leading-edge processors and chipsets across all segments. Looking forward, we remain optimistic about our growth opportunities as we continue to reap the benefits of our 45nm technology leadership."
Q1 2008 vs. Q1 2007 vs. Q4 2007
------------------------- ----------------- ------------- ------------
Revenue $9.7 billion +9% -10%
------------------------- ----------------- ------------- ------------
Operating Income $2.1 billion +23% -32%
------------------------- ----------------- ------------- ------------
Net Income $1.4 billion -12% -36%
------------------------- ----------------- ------------- ------------
EPS 25 cents -11% -34%
------------------------- ----------------- ------------- ------------
Results for the first quarter of 2008 included the effects of
restructuring and asset impairment charges that lowered EPS by 4
cents. Results in last year's first quarter included tax adjustments
along with the effects of restructuring and asset impairment charges
that together increased EPS by approximately 5 cents. Results for the
fourth quarter of 2007 included the effects of restructuring and
asset impairment charges that reduced EPS by approximately 2.5 cents.
----------------------------------------------------------------------
Financial and Key Product Information
-- Intel's microprocessor and chipset businesses came in as
expected. Total microprocessor units were lower sequentially,
with the ASP approximately flat.
-- Consistent with the company's updated expectations, NAND
revenue was flat as significant price declines offset unit
growth.
-- Gross margin was 53.8 percent, in line with the company's
revised expectation.
-- Restructuring and asset impairment charges of $329 million
included $275 million in impairment charges for the assets
transferred to Numonyx.
-- The effective tax rate was 33.5 percent, higher than the
previous expectation of approximately 31 percent, primarily
driven by a higher than expected proportion of profits being
in higher-tax jurisdictions along with the tax effects of
impairment charges related to the assets sold to Numonyx.
-- The company used $2.5 billion to repurchase 122 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 April 14.
Q2 2008:
-- Revenue: Between $9.0 billion and $9.6 billion. The forecast
reflects a significant reduction in NOR flash memory revenue
as a result of the Numonyx transaction.
-- Gross margin: 56 percent plus or minus a couple of points.
-- Spending (R&D plus MG&A): Between $2.8 billion and $2.9
billion.
-- Restructuring and asset impairment charges: Approximately $250
million.
-- Net gains from equity investments and interest and other:
Approximately $75 million.
-- Tax rate: Approximately 33 percent.
-- Depreciation: Approximately $1.1 billion.
Full-Year 2008:
-- Gross margin: 57 percent plus or minus a few points,
unchanged.
-- R&D: Approximately $6 billion, higher than the previous
expectation of approximately $5.9 billion.
-- MG&A: Approximately $5.5 billion, unchanged.
-- Capital spending: $5.2 billion plus or minus $200 million,
unchanged.
-- Tax rate: The tax rate for the third and fourth quarters is
expected to be approximately 33 percent.
-- Depreciation: $4.4 billion plus or minus $100 million,
unchanged.
Risk Factors
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
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. Additionally,
Intel is in the process of transitioning to its next
generation of products on 45nm 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; 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.
-- Gains or losses from equity securities and interest and other
could vary from expectations depending on fixed income and
equity market volatility; gains or losses realized on the sale
or exchange of securities; gains or losses from equity method
investments; impairment charges related to marketable,
non-marketable and other investments; interest rates; cash
balances; and changes in fair value of derivative instruments.
-- 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-K for the year ended Dec. 29, 2007.
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 30 until publication of the company's second-quarter 2008 earnings release, 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.
Earnings Webcast
Intel will hold a public webcast at 2:30 p.m. PDT today on its Investor Relations Web site at intc.com. A webcast replay and MP3 audio download will also be made available on the site.
Intel, 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 at blogs.intel.com.
Intel, the Intel logo and Intel Xeon, Intel Atom and Intel Centrino 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
-------------------
Mar. 29, Mar. 30,
2008 2007
--------- ---------
NET REVENUE $ 9,673 $ 8,852
Cost of sales 4,466 4,420
--------- ---------
GROSS MARGIN 5,207 4,432
--------- ---------
Research and development 1,467 1,400
Marketing, general and administrative 1,349 1,282
Restructuring and asset impairment charges 329 75
--------- ---------
OPERATING EXPENSES 3,145 2,757
--------- ---------
OPERATING INCOME 2,062 1,675
Gains (losses) on equity investments, net (59) 29
Interest and other, net 168 169
--------- ---------
INCOME BEFORE TAXES 2,171 1,873
Provision for taxes 728 237
--------- ---------
NET INCOME $ 1,443 $ 1,636
========= =========
BASIC EARNINGS PER COMMON SHARE $ 0.25 $ 0.28
========= =========
DILUTED EARNINGS PER COMMON SHARE $ 0.25 $ 0.28
========= =========
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 5,787 5,777
DILUTED 5,879 5,874
INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions)
Mar. 29, Dec. 29,
2008 2007
---------- ---------
CURRENT ASSETS
Cash and cash equivalents $ 5,883 $ 7,307
Short-term investments 4,993 5,490
Trading assets 2,816 2,566
Accounts receivable, net 2,725 2,576
Inventories:
Raw materials 545 507
Work in process 1,361 1,460
Finished goods 1,366 1,403
---------- ---------
3,272 3,370
Deferred tax assets 1,143 1,186
Other current assets 1,232 1,390
---------- ---------
TOTAL CURRENT ASSETS 22,064 23,885
---------- ---------
Property, plant and equipment, net 16,667 16,918
Marketable equity securities 530 987
Other long-term investments 4,473 4,398
Goodwill 3,916 3,916
Other long-term assets 5,737 5,547
---------- ---------
TOTAL ASSETS $ 53,387 $ 55,651
========== =========
CURRENT LIABILITIES
Short-term debt $ 189 $ 142
Accounts payable 2,338 2,361
Accrued compensation and benefits 1,325 2,417
Accrued advertising 759 749
Deferred income on shipments to distributors 643 625
Other accrued liabilities 2,775 1,938
Income taxes payable 639 339
---------- ---------
TOTAL CURRENT LIABILITIES 8,668 8,571
---------- ---------
Long-term income taxes payable 811 785
Deferred tax liabilities 170 411
Long-term debt 1,990 1,980
Other long-term liabilities 1,088 1,142
Stockholders' equity:
Preferred stock - -
Common stock and capital in excess of par value 12,118 11,653
Accumulated other comprehensive income (loss) 72 261
Retained earnings 28,470 30,848
---------- ---------
TOTAL STOCKHOLDERS' EQUITY 40,660 42,762
---------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 53,387 $ 55,651
========== =========
INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
(In millions)
Q1 2008 Q4 2007 Q1 2007
--------- --------- ---------
GEOGRAPHIC AND OTHER REVENUE
INFORMATION:
Asia-Pacific $ 4,788 $ 5,338 $ 4,432
50% 50% 50%
Americas $ 2,016 $ 2,098 $ 1,727
21% 19% 20%
Europe $ 1,863 $ 2,231 $ 1,722
19% 21% 19%
Japan $ 1,006 $ 1,045 $ 971
10% 10% 11%
Total flash memory revenue $ 497 $ 586 $ 469
CASH INVESTMENTS:
Cash and short-term investments $ 10,876 $ 12,797 $ 7,689
Trading assets - marketable debt
securities (1) 2,362 2,074 877
--------- --------- ---------
Total cash investments $ 13,238 $ 14,871 $ 8,566
TRADING ASSETS:
Trading assets - equity securities
offsetting deferred compensation (2) $ 454 $ 492 $ 458
Total trading assets - sum of 1+2 $ 2,816 $ 2,566 $ 1,335
SELECTED CASH FLOW INFORMATION:
Depreciation $ 1,102 $ 1,108 $ 1,187
Share-based compensation $ 219 $ 204 $ 284
Amortization of intangibles and other
acquisition-related costs $ 63 $ 63 $ 64
Capital spending ($907) ($1,273) ($1,361)
Stock repurchase program ($2,500) ($1,500) ($400)
Proceeds from sales of shares to
employees, tax benefit & other $ 475 $ 844 $ 604
Dividends paid ($739) ($658) ($650)
Net cash received/(used) for
divestitures/acquisitions $ 75 ($2) -
EARNINGS PER SHARE INFORMATION:
Weighted average common shares
outstanding - basic 5,787 5,841 5,777
Dilutive effect of employee equity
incentive plans 41 96 46
Dilutive effect of convertible debt 51 51 51
--------- --------- ---------
Weighted average common shares
outstanding - diluted 5,879 5,988 5,874
STOCK BUYBACK:
Shares repurchased 122 57 19
Cumulative shares repurchased 3,064 2,942 2,850
Remaining dollars authorized for buyback
(in billions) $ 12.0 $ 14.5 $ 16.9
OTHER INFORMATION:
Employees (in thousands) 84.6 86.3 91.8
INTEL CORPORATION
SUPPLEMENTAL OPERATING RESULTS AND OTHER INFORMATION
($ in millions)
OPERATING SEGMENT INFORMATION: Q1 2008 Q4 2007 Q1 2007
----------------------------------------------------------------------
Digital Enterprise Group
Microprocessor revenue 4,123 4,328 3,561
Chipset, motherboard and other revenue 1,175 1,411 1,193
Net revenue 5,298 5,739 4,754
Operating income 1,722 2,135 931
----------------------------------------------------------------------
Mobility Group
Microprocessor revenue 2,726 2,989 2,441
Chipset and other revenue 943 1,118 866
Net revenue 3,669 4,107 3,307
Operating income 1,185 1,684 1,382
----------------------------------------------------------------------
All Other
Net revenue 706 866 791
Operating loss (845) (772) (638)
----------------------------------------------------------------------
Total
Net revenue 9,673 10,712 8,852
Operating income 2,062 3,047 1,675
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Source: Intel Corporation
Released Apr 15, 2008 • 4:15 PM EDT