Intel Posts Record Quarterly Revenue
2007 Operating Income $8.2 Billion, up 45 Percent
-- Fourth-Quarter Revenue $10.7 Billion, up 10.5 Percent Year-over-Year
-- Gross Margin 58 Percent, up 8.5 Points Year-over-Year
-- Operating Income $3 Billion, up 105 Percent Year-over-Year
-- Record Microprocessor and Chipset Units and Revenue
-- Net Income $2.3 Billion; EPS 38 Cents
SANTA CLARA, Calif.--(BUSINESS WIRE)--
Intel Corporation today announced record fourth-quarter revenue of $10.7 billion, operating income of $3 billion, net income of $2.3 billion and earnings per share (EPS) of 38 cents. For 2007, operating income grew 45 percent, reflecting the company's ongoing efficiency programs, with profits growing significantly faster than revenue.
"2007 was a breakthrough year for innovation at Intel," said Paul Otellini, Intel president and CEO. "We realized the benefits of our investments in new products and our efforts to drive efficiencies. Our customers embraced the Intel(R) Core(TM) microarchitecture, extending our competitive leadership and driving a significant gain in operating results. We enter 2008 with the best combination of products, silicon technology and manufacturing leadership in our history."
Q4 2007 vs. Q4 2006 vs. Q3 2007
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Revenue $10.7 billion +10.5% +6%
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Operating Income $3 billion +105% +42%
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Net Income $2.3 billion +51% +27%
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EPS 38 cents +46% +27%
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Results for the fourth quarter of 2007 included the effects of
restructuring and asset impairment charges that reduced operating
income by $234 million and EPS by approximately 2.5 cents. Results
for the fourth quarter of 2006 included the effects of restructuring
and asset impairment charges that reduced operating income by $457
million as well as a divestiture gain recorded in "interest and
other, net." The charges and gain resulted in a net increase to EPS
of approximately 1 cent.
----------------------------------------------------------------------
For 2007, Intel achieved revenue of $38.3 billion, operating income of $8.2 billion, net income of $7 billion and EPS of $1.18. Intel generated more than $12 billion in cash from operations, paid record cash dividends of $2.6 billion and used $2.75 billion to repurchase 111 million shares of common stock.
2007 vs. 2006
----------------------------------------------------------------------
Revenue $38.3 billion +8%
----------------------------------------------------------------------
Operating Income $8.2 billion +45%
----------------------------------------------------------------------
Net Income $7 billion +38%
----------------------------------------------------------------------
EPS $1.18 +37%
----------------------------------------------------------------------
Financial Review
-- Record revenue of $10.7 billion was $88 million below the
midpoint of expectations. Revenue for computing-related
products was as expected while revenue for NAND memory was
lower than expected, primarily due to lower average selling
prices (ASPs).
-- Gross margin was 58.1 percent, up 6.9 points from the third
quarter driven by higher unit volumes and lower unit costs,
45nm microprocessor qualification and lower 45nm start-up
costs. Gross margin in the third quarter reflected the impact
of a legal settlement.
-- Spending was in line with expectations.
-- Restructuring and asset impairment charges of $234 million
were higher than the previous forecast of $130 million due to
an impairment of NOR flash assets related to the proposed
Numonyx transaction.
Key Product Trends (Sequential)
-- Total microprocessor units set a record; the ASP was flat.
-- Chipset units set a record.
-- Total flash units were flat.
Business Outlook
Intel's Business Outlook for the first quarter of 2008 does not include the potential impact of mergers, acquisitions, divestitures or other business combinations that may be completed after Jan. 14. Intel's Business Outlook for the full year reflects the expectation that the Numonyx transaction will close during the first quarter.
Q1 2008 Outlook
-- Revenue: Between $9.4 billion and $10 billion.
-- 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 $100
million.
-- Net gains from equity investments and interest and other:
Approximately $175 million.
-- Tax rate: Approximately 31 percent.
-- Depreciation: Approximately $1.1 billion.
2008 Outlook
-- Gross margin: 57 percent plus or minus a few points.
-- R&D: Approximately $5.9 billion.
-- MG&A: Approximately $5.5 billion.
-- Capital spending: $5.2 billion plus or minus $200 million.
-- Tax rate: Approximately 31 percent.
-- Depreciation: $4.4 billion plus or minus $100 million.
The above statements and any others in this document that refer to plans and expectations for the first 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 factors set forth below in the section titled "Risk Factors" to be the important factors that could cause actual results to differ materially from the corporation's published expectations.
Recent Highlights
-- Intel generated record unit shipments of microprocessors and
chipsets for the fourth quarter of 2007 and the year.
-- Intel introduced 32 microprocessors based on the company's
breakthrough 45nm process technology with Hafnium-based high-k
metal gate technology, extending the company's leadership in
energy-efficient processing. Intel's 45nm ramp has been the
fastest in company history.
-- At the International Consumer Electronics Show, Intel
described new low-power, low-cost Intel processors designed to
bring the Internet to consumer electronics (CE) devices for
the living room and ultra-mobile devices that can fit in one's
pocket. Intel's processor for CE devices, code-named Canmore,
will support 1080p video, 7.1 surround-sound audio and 3-D
graphics.
Risk Factors
-- Factors that could cause demand to be different from Intel's
expectations include 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 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. Intel is also in
the midst of forming Numonyx, a private, independent
semiconductor company, together with STMicroelectronics N.V.
and Francisco Partners L.P. A change in the financial
performance of the contributed businesses could have a
negative impact on our financial statements. Intel's equity
proportion of the new company's results will be reflected on
its financial statements below operating income and with a one
quarter lag. The results could have a negative impact on
Intel's overall financial results.
-- 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 affected by the amount, type, and
valuation of share-based awards granted as well as the amount
of awards cancelled due to employee turnover and the timing of
award exercises by employees.
-- 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 Sept. 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 March 7 until publication of the company's first-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.
Analyst Meeting
The company plans to hold the Intel 2008 Investor Meeting on March 5-6. Webcast opportunities and presentations will be posted on the company's investor relations Web site at intc.com.
Earnings Webcast
Intel will hold a public webcast at 2:30 p.m. PST 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 Core 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 Twelve Months Ended
--------------------- ---------------------
Dec. 29, Dec. 30, Dec. 29, Dec. 30,
2007 2006 2007 2006
----------- --------- ---------- ----------
NET REVENUE $10,712 $9,694 $38,334 $35,382
Cost of sales 4,486 4,884 18,430 17,164
----------- --------- ---------- ----------
GROSS MARGIN 6,226 4,810 19,904 18,218
----------- --------- ---------- ----------
Research and development 1,481 1,426 5,755 5,873
Marketing, general and
administrative 1,462 1,434 5,401 6,096
Restructuring and asset
impairment charges 234 457 516 555
Amortization of
acquisition-related
intangibles and costs 2 5 16 42
----------- --------- ---------- ----------
OPERATING EXPENSES 3,179 3,322 11,688 12,566
----------- --------- ---------- ----------
OPERATING INCOME 3,047 1,488 8,216 5,652
Gains (losses) on equity
investments, net (19) 7 157 214
Interest and other, net 233 632 793 1,202
----------- --------- ---------- ----------
INCOME BEFORE TAXES 3,261 2,127 9,166 7,068
Provision for taxes 990 626 2,190 2,024
----------- --------- ---------- ----------
NET INCOME $ 2,271 $1,501 $ 6,976 $ 5,044
=========== ========= ========== ==========
BASIC EARNINGS PER COMMON
SHARE $ 0.39 $ 0.26 $ 1.20 $ 0.87
=========== ========= ========== ==========
DILUTED EARNINGS PER COMMON
SHARE $ 0.38 $ 0.26 $ 1.18 $ 0.86
=========== ========= ========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING:
BASIC 5,841 5,764 5,816 5,797
DILUTED 5,988 5,867 5,936 5,880
INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions)
Dec. 29, Sept. 29, Dec. 30,
2007 2007 2006
--------- --------- ---------
CURRENT ASSETS
Cash and cash equivalents $ 7,307 $ 5,844 $ 6,598
Short-term investments 5,490 4,952 2,270
Trading assets 2,566 2,225 1,134
Accounts receivable, net 2,576 2,933 2,709
Inventories:
Raw materials 507 538 608
Work in process 1,460 1,647 2,044
Finished goods 1,403 1,353 1,662
--------- --------- ---------
3,370 3,538 4,314
Deferred tax assets 1,186 1,088 997
Other current assets 1,390 846 258
--------- --------- ---------
TOTAL CURRENT ASSETS 23,885 21,426 18,280
--------- --------- ---------
Property, plant and equipment, net 16,918 16,985 17,602
Marketable equity securities 987 1,061 398
Other long-term investments 4,398 4,081 4,023
Goodwill 3,916 3,917 3,861
Other long-term assets 5,547 5,569 4,204
--------- --------- ---------
TOTAL ASSETS $55,651 $53,039 $48,368
========= ========= =========
CURRENT LIABILITIES
Short-term debt $ 142 $ 137 $ 180
Accounts payable 2,361 2,338 2,256
Accrued compensation and benefits 2,417 1,737 1,644
Accrued advertising 749 702 846
Deferred income on shipments to
distributors 625 628 599
Other accrued liabilities 1,938 2,215 1,192
Income taxes payable 339 6 1,797
--------- --------- ---------
TOTAL CURRENT LIABILITIES 8,571 7,763 8,514
--------- --------- ---------
Long-term taxes payable 785 814 -
Deferred tax liabilities 411 454 265
Long-term debt 1,980 1,853 1,848
Other long-term liabilities 1,142 1,253 989
Stockholders' equity:
Preferred stock - - -
Common stock and capital in excess of
par value 11,653 10,695 7,825
Accumulated other comprehensive income
(loss) 261 232 (57)
Retained earnings 30,848 29,975 28,984
--------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY 42,762 40,902 36,752
--------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $55,651 $53,039 $48,368
========= ========= =========
INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
(In millions)
Q4 2007 Q3 2007 Q4 2006
-------- -------- --------
GEOGRAPHIC REVENUE:
Asia-Pacific $5,338 $5,205 $4,855
50% 52% 50%
Americas $2,098 $2,067 $2,003
19% 20% 21%
Europe $2,231 $1,824 $1,900
21% 18% 19%
Japan $1,045 $994 $936
10% 10% 10%
CASH INVESTMENTS:
Cash and short-term investments $12,797 $10,796 $8,868
Trading assets - marketable debt securities
(1) 2,074 1,732 684
-------- -------- --------
Total cash investments $14,871 $12,528 $9,552
TRADING ASSETS:
Trading assets - equity securities
offsetting deferred compensation (2) $492 $493 $450
Total trading assets - sum of 1+2 $2,566 $2,225 $1,134
SELECTED CASH FLOW INFORMATION:
Depreciation $1,108 $1,098 $1,166
Share-based compensation $204 $227 $334
Amortization of intangibles and other
acquisition-related costs $63 $65 $61
Capital spending ($1,273) ($1,088) ($1,148)
Stock repurchase program ($1,500) ($750) ($150)
Proceeds from sales of shares to employees,
tax benefit & other $838 $908 $288
Dividends paid ($658) ($657) ($576)
Net cash received (used) for
divestitures/acquisitions ($2) ($42) $600
EARNINGS PER SHARE INFORMATION:
Weighted average common shares outstanding -
basic 5,841 5,837 5,764
Dilutive effect of employee equity incentive
plans 96 79 52
Dilutive effect of convertible debt 51 51 51
-------- -------- --------
Weighted average common shares outstanding -
diluted 5,988 5,967 5,867
STOCK BUYBACK:
Shares repurchased 57 30 7
Cumulative shares repurchased 2,942 2,885 2,831
Remaining dollars authorized for buyback (in
billions) $14.5 $16.0 $17.3
OTHER INFORMATION:
Employees (in thousands) 86.3 88.1 94.1
INTEL CORPORATION
SUPPLEMENTAL OPERATING RESULTS AND OTHER INFORMATION
($ in millions)
Three Months Ended Twelve Months Ended
--------------------------------------
OPERATING SEGMENT INFORMATION: Q4 2007 Q4 2006 Q4 2007 Q4 2006
----------------------------------------------------------------------
Digital Enterprise Group
Microprocessor revenue 4,328 3,855 15,234 14,606
Chipset, motherboard and other
revenue 1,411 1,307 5,106 5,270
Net revenue 5,739 5,162 20,340 19,876
Operating income 2,135 928 5,169 3,510
----------------------------------------------------------------------
Mobility Group
Microprocessor revenue 2,989 2,668 10,660 9,212
Chipset and other revenue 1,118 925 4,021 3,097
Net revenue 4,107 3,593 14,681 12,309
Operating income 1,683 1,538 5,606 4,595
----------------------------------------------------------------------
All Other
Net revenue 866 939 3,313 3,197
Operating loss (771) (978) (2,559) (2,453)
----------------------------------------------------------------------
Total
Net revenue 10,712 9,694 38,334 35,382
Operating income 3,047 1,488 8,216 5,652
----------------------------------------------------------------------
In the fourth quarter of 2007, we made organizational changes that
resulted in the formation of the NAND Products Group operating
segment, which includes the NAND flash memory business that was
previously included in the Flash Memory Group operating segment. The
Flash Memory Group primarily includes sales of NOR flash memory
products. The NAND Products Group and Flash Memory Group operating
segments are included within the "all other" category.
Source: Intel Corporation
Released Jan 15, 2008 • 4:15 PM EST