Intel Reports First-Quarter Revenue of $12.6 Billion
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.
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.
*Revenue: $12.9 billion, plus or minus $500 million.
*Gross margin percentage: 58 percent, plus or minus a couple percentage
*R&D plus MG&A spending: approximately $4.7 billion.
*Amortization of acquisition-related intangibles: approximately $70
*Impact of equity investments and interest and other: approximately zero.
*Depreciation: approximately $1.7 billion.
*Revenue: low single-digit percentage increase, unchanged from prior
*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
*Tax Rate: approximately 27 percent for each of the remaining quarters of
*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.
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%
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
*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
*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
*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
*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.
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
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.
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
CONSOLIDATED SUMMARY BALANCE SHEET DATA
Mar 30, Dec 29,
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
Raw materials 451 478
Work in process 2,129 2,219
Finished goods 1,778 2,037
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
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
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
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
Q1 2013 Q4 2012 Q1 2012
Cash and short-term investments $10,021 $12,477 $9,441
Trading assets - marketable debt 7,052 5,685 4,312
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
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)
Investments in non-marketable equity ($35) ($117) ($116)
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
Weighted average common shares 4,948 4,968 4,999
outstanding - basic
Dilutive effect of employee equity 78 73 126
Dilutive effect of convertible debt 54 54 67
Weighted average common shares 5,080 5,095 5,192
outstanding - diluted
Shares repurchased 25 47 57
Cumulative shares repurchased (in 4.3 4.3 4.1
Remaining dollars authorized for $4.8 $5.3 $8.6
buyback (in billions)
Employees (in thousands) 105.4 105.0 100.8
SUPPLEMENTAL OPERATING GROUP RESULTS
Three Months Ended
Mar 30, Dec 29, Mar 31,
2013 2012 2012
PC Client $ 7,992 $ 8,560 $ 8,499
Data Center 2,585 2,776 2,405
Architecture 978 1,018 1,075
Architecture 11,555 12,354 11,979
Software and 588 636 571
All other 437 487 356
TOTAL NET $ 12,580 $ 13,477 $ 12,906
PC Client $ 2,513 $ 2,829 $ 3,491
Data Center 1,079 1,317 1,135
Architecture (611) (495) (312)
Architecture 2,981 3,651 4,314
Software and (24) (36) 7
All other (438) (460) (511)
OPERATING $ 2,519 $ 3,155 $ 3,810
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
• Data Center Group: Delivering platforms designed for the server,
workstation, and storage computing market segments; and wired network
• Other Intel Architecture Group consist of the following:
• Intelligent Systems Group: Delivering platforms designed for embedded
• Intel Mobile Communications: Delivering mobile phone components such
as baseband processors, radio frequency transceivers, and power
• Tablet Group: Delivering platforms designed for the tablet market
• Phone Group: Delivering platforms designed for the smartphone market
• Service Provider Group: Delivering gateway and set-top box components.
• Netbook Group: Delivering platforms designed for the netbook market
• 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
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
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
Reuben Gallegos, 408-765-5374 (Investor Relations)
Chuck Mulloy, 408-765-3484 (Media Relations)
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