Intel Reports First-Quarter Revenue of $12.6 Billion Business Wire SANTA CLARA, Calif. -- April 16, 2013 Intel Corporation today reported first-quarter revenue of $12.6 billion, operating income of $2.5 billion, net income of $2.0 billion and EPS of $0.40. The company generated approximately $4.3 billion in cash from operations, paid dividends of $1.1 billion, and used $533 million to repurchase 25 million shares of stock. “Amidst market softness, Intel performed well in the first quarter and I’m excited about what lies ahead for the company,” said Paul Otellini, Intel president and CEO. “We shipped our next generation PC microprocessors, introduced a new family of products for micro-servers and will ship our new tablet and smartphone microprocessors this quarter. We are working with our customers to introduce innovative new products across multiple operating systems. The transition to 14nm technology this year will significantly increase the value provided by Intel architecture and process technology for our customers and in the marketplace.” Q1 Key Financial Information and Business Unit Trends *PC Client Group revenue of $8.0 billion, down 6.6 percent sequentially and down 6.0 percent year-over-year. *Data Center Group revenue of $2.6 billion, down 6.9 percent sequentially and up 7.5 percent year-over-year. *Other Intel® Architecture Group revenue of $1.0 billion, down 3.9 percent sequentially and down 9.0 percent year-over-year. *Gross margin of 56 percent, down 2 percentage points sequentially and down 8 percentage points year-over-year. *R&D plus MG&A spending of $4.5 billion, in line with the company’s expectation of approximately $4.6 billion. *Tax rate of 16 percent. Business Outlook Intel’s Business Outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures or other investments that may be completed after April 16. Q2 2013 *Revenue: $12.9 billion, plus or minus $500 million. *Gross margin percentage: 58 percent, plus or minus a couple percentage points. *R&D plus MG&A spending: approximately $4.7 billion. *Amortization of acquisition-related intangibles: approximately $70 million. *Impact of equity investments and interest and other: approximately zero. *Depreciation: approximately $1.7 billion. Full-Year 2013 *Revenue: low single-digit percentage increase, unchanged from prior expectations. *Gross margin percentage: 60 percent, plus or minus a few percentage points, unchanged from prior expectations. *R&D plus MG&A spending: $18.9 billion, plus or minus $200 million, unchanged from prior expectations. *Amortization of acquisition-related intangibles: approximately $300 million, unchanged from prior expectations. *Depreciation: $6.8 billion, plus or minus $100 million, unchanged from prior expectations. *Tax Rate: approximately 27 percent for each of the remaining quarters of the year. *Full-year capital spending: $12.0 billion, plus or minus $500 million, down $1.0 billion from prior expectations. For additional information regarding Intel’s results and Business Outlook, please see the CFO commentary at: www.intc.com/results.cfm. Status of Business Outlook Intel’s Business Outlook is posted on intc.com and may be reiterated in public or private meetings with investors and others. The Business Outlook will be effective through the close of business June 14 unless earlier updated; except that the Business Outlook for amortization of acquisition-related intangibles, impact of equity investments and interest and other, and tax rate, will be effective only through the close of business on April 23. Intel’s Quiet Period will start from the close of business on June 14 until publication of the company’s second-quarter earnings release, scheduled for July 17, 2013. During the Quiet Period, all of the Business Outlook and other forward-looking statements 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. Financial Comparison Quarterly Q1 2013 Q4 2012 vs. Q4 2012 Revenue $12.6 billion $13.5 billion down 7% Gross Margin 56.2% 58.0% down 1.8 pts. Operating Income $2.5 billion $3.2 billion down 20% Net Income $2.0 billion $2.5 billion down 17% Earnings Per Share 40 cents 48 cents down 17% 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. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” “should” and their variations identify forward-looking statements.Statements that refer to or are based on projections, uncertain events or assumptions also identify forward-looking statements.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 company’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; supply constraints and other disruptions affecting customers; changes in customer order patterns including order cancellations; and changes in the level of inventory at customers. Uncertainty in global economic and financial conditions poses a risk that consumers and businesses may defer purchases in response to negative financial events, which could negatively affect product demand and other related matters. *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; 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 capacity utilization; variations in inventory valuation, including variations related to the timing of qualifying products for sale; changes in revenue levels; segment product mix; the timing and execution of the manufacturing ramp and associated costs; start-up costs; excess or obsolete inventory; changes in unit costs; defects or disruptions in the supply of materials or resources; product manufacturing quality/yields; and impairments of long-lived assets, including manufacturing, assembly/test and intangible assets. *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 our marketable equity security portfolio balance is concentrated in ASML Holding, N.V., and declines in value could result in impairment charges, impacting gains or losses on equity securities. *Intel's results could be affected 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. *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. *Intel’s results could be affected by the timing of closing of acquisitions and divestitures. *Intel’s current chief executive officer plans to retire in May 2013 and the Board of Directors is working to choose a successor. The succession and transition process may have a direct and/or indirect effect on the business and operations of the company. In connection with the appointment of the new CEO, the company will seek to retain our executive management team (some of whom are being considered for the CEO position), and keep employees focused on achieving the company’s strategic goals and objectives. *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, disclosure 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 Intel 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 company’s most recent report on Form 10-K. Earnings Webcast Intel will hold a public webcast at 2 p.m. PDT today on its Investor Relations website at www.intc.com. A webcast replay and MP3 download will also be available on the site. Intel plans to report its earnings for the second quarter of 2013 on July 17, 2013. Immediately following the earnings report, the company plans to publish a commentary by Stacy J. Smith, executive vice president, chief financial officer, and director of corporate strategy, at www.intc.com/results.cfm. A public webcast of Intel’s earnings conference call will follow at 2 p.m. PDT at www.intc.com. About Intel 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 newsroom.intel.com and blogs.intel.com. Intel and the Intel logo 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 INCOME DATA (In millions, except per share amounts) Three Months Ended Mar 30, Dec 29, Mar 31, 2013 2012 2012 NET REVENUE $ 12,580 $ 13,477 $ 12,906 Cost of sales 5,514 5,660 4,641 GROSS MARGIN 7,066 7,817 8,265 Research and development 2,527 2,629 2,401 Marketing, general and administrative 1,947 1,958 1,973 R&D AND MG&A 4,474 4,587 4,374 Amortization of acquisition-related intangibles 73 75 81 OPERATING EXPENSES 4,547 4,662 4,455 OPERATING INCOME 2,519 3,155 3,810 Gains (losses) on equity investments, net (26) 60 (19) Interest and other, net (50) (11) 23 INCOME BEFORE TAXES 2,443 3,204 3,814 Provision for taxes 398 736 1,076 NET INCOME $ 2,045 $ 2,468 $ 2,738 BASIC EARNINGS PER COMMON SHARE $ 0.41 $ 0.50 $ 0.55 DILUTED EARNINGS PER COMMON SHARE $ 0.40 $ 0.48 $ 0.53 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: BASIC 4,948 4,968 4,999 DILUTED 5,080 5,095 5,192 INTEL CORPORATION CONSOLIDATED SUMMARY BALANCE SHEET DATA (In millions) Mar 30, Dec 29, 2013 2012 CURRENT ASSETS Cash and cash equivalents $ 5,698 $ 8,478 Short-term investments 4,323 3,999 Trading assets 7,052 5,685 Accounts receivable, net 3,536 3,833 Inventories: Raw materials 451 478 Work in process 2,129 2,219 Finished goods 1,778 2,037 4,358 4,734 Deferred tax assets 2,109 2,117 Other current assets 1,601 2,512 TOTAL CURRENT ASSETS 28,677 31,358 Property, plant and equipment, net 28,418 27,983 Marketable equity securities 4,698 4,424 Other long-term investments 1,309 493 Goodwill 9,756 9,710 Identified intangible assets, net 5,807 6,235 Other long-term assets 4,418 4,148 TOTAL ASSETS $ 83,083 $ 84,351 CURRENT LIABILITIES Short-term debt $ 88 $ 312 Accounts payable 2,654 3,023 Accrued compensation and benefits 1,501 2,972 Accrued advertising 987 1,015 Deferred income 1,901 1,932 Other accrued liabilities 4,667 3,644 TOTAL CURRENT LIABILITIES 11,798 12,898 Long-term debt 13,143 13,136 Long-term deferred tax liabilities 3,427 3,412 Other long-term liabilities 3,521 3,702 Stockholders' equity: Preferred stock — — Common stock and capital in excess of par value 20,098 19,464 Accumulated other comprehensive income (loss) (410) (399) Retained earnings 31,506 32,138 TOTAL STOCKHOLDERS' EQUITY 51,194 51,203 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 83,083 $ 84,351 INTEL CORPORATION SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION (In millions) Q1 2013 Q4 2012 Q1 2012 CASH INVESTMENTS: Cash and short-term investments $10,021 $12,477 $9,441 Trading assets - marketable debt 7,052 5,685 4,312 securities Total cash investments $17,073 $18,162 $13,753 CURRENT DEFERRED INCOME: Deferred income on shipments of $705 $694 $814 components to distributors Deferred income from software and 1,196 1,238 1,187 services group Total current deferred income $1,901 $1,932 $2,001 SELECTED CASH FLOW INFORMATION: Depreciation $1,682 $1,641 $1,519 Share-based compensation $295 $272 $274 Amortization of intangibles $382 $364 $266 Capital spending ($2,174) ($2,504) ($2,974) Net cash (used)/received for ($98) ($70) ($176) acquisitions/divestitures Investments in non-marketable equity ($35) ($117) ($116) instruments Stock repurchase program ($533) ($1,000) ($1,500) Proceeds from sales of shares to $466 $139 $1,263 employees & excess tax benefit Issuance of long-term debt — $6,124 — Dividends paid ($1,114) ($1,119) ($1,049) EARNINGS PER COMMON SHARE INFORMATION: Weighted average common shares 4,948 4,968 4,999 outstanding - basic Dilutive effect of employee equity 78 73 126 incentive plans Dilutive effect of convertible debt 54 54 67 Weighted average common shares 5,080 5,095 5,192 outstanding - diluted STOCK BUYBACK: Shares repurchased 25 47 57 Cumulative shares repurchased (in 4.3 4.3 4.1 billions) Remaining dollars authorized for $4.8 $5.3 $8.6 buyback (in billions) OTHER INFORMATION: Employees (in thousands) 105.4 105.0 100.8 INTEL CORPORATION SUPPLEMENTAL OPERATING GROUP RESULTS (In millions) Three Months Ended Mar 30, Dec 29, Mar 31, 2013 2012 2012 Net Revenue PC Client $ 7,992 $ 8,560 $ 8,499 Group Data Center 2,585 2,776 2,405 Group Other Intel Architecture 978 1,018 1,075 Group Intel Architecture 11,555 12,354 11,979 Group Software and 588 636 571 Services Group All other 437 487 356 TOTAL NET $ 12,580 $ 13,477 $ 12,906 REVENUE Operating income (loss) PC Client $ 2,513 $ 2,829 $ 3,491 Group Data Center 1,079 1,317 1,135 Group Other Intel Architecture (611) (495) (312) Group Intel Architecture 2,981 3,651 4,314 Group Software and (24) (36) 7 Services Group All other (438) (460) (511) TOTAL OPERATING $ 2,519 $ 3,155 $ 3,810 INCOME In the first quarter of 2013, we completed a reorganization that transferred a portion of our wired connectivity business formerly included within the Data Center Group to the PC Client Group, as the technology from that portion of the business is primarily used for client connectivity. Prior period amounts have been adjusted retrospectively to reflect this new organization structure. Our operating groups shown above are comprised of the following: • PC Client Group: Delivering platforms designed for the notebook (including Ultrabook^TM, detachable, and convertible systems) and desktop (including high-end enthusiast PCs) market segments; wireless and wired connectivity products. • Data Center Group: Delivering platforms designed for the server, workstation, and storage computing market segments; and wired network connectivity products. • Other Intel Architecture Group consist of the following: • Intelligent Systems Group: Delivering platforms designed for embedded applications. • Intel Mobile Communications: Delivering mobile phone components such as baseband processors, radio frequency transceivers, and power management chips. • Tablet Group: Delivering platforms designed for the tablet market segment. • Phone Group: Delivering platforms designed for the smartphone market segment. • Service Provider Group: Delivering gateway and set-top box components. • Netbook Group: Delivering platforms designed for the netbook market segment. • Software and Services Group consists of the following: • McAfee: A wholly owned subsidiary delivering software products for endpoint security, network and content security, risk and compliance, and consumer and mobile security. • Wind River Software Group: A wholly owned subsidiary delivering software optimized products for the embedded and mobile market segments. • Software and Services Group: Delivering software products and services that promote Intel Architecture as the platform of choice for software development. All Other consists of the following: • Non-Volatile Memory Solutions Group: Delivering NAND flash memory products for use in a variety of devices. • Corporate: Revenue, expenses, and charges such as: • A portion of profit-dependent compensation and other expenses not allocated to the operating segments. • Divested businesses for which discrete operating results are not reviewed by our CODM. • Results of operations of start-up businesses, including our foundry business, that support our initiatives. • Acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill. INTEL CORPORATION SUPPLEMENTAL PLATFORM REVENUE INFORMATION Q1 2013 Q1 2013 compared to Q4 2012 compared to Q1 2012 PC Client Platform Unit Volumes (6%) (7%) Average Selling Prices 1% 1% Data Center Platform Unit Volumes (6%) 6% Average Selling Prices (1%) 2% PC Client Group Notebook and Desktop Platform Key Drivers -Notebook platform volumes decreased 6% from Q1 2012 to Q1 2013 -Desktop platform volume decreased 7% from Q1 2012 to Q1 2013 -Desktop platform average selling prices increased 5% from Q1 2012 to Q1 2013 Contact: Intel Corporation Reuben Gallegos, 408-765-5374 (Investor Relations) firstname.lastname@example.org Chuck Mulloy, 408-765-3484 (Media Relations) email@example.com
Intel Reports First-Quarter Revenue of $12.6 Billion
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