Intel Reports Third-Quarter Revenue of $13.5 Billion

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Intel Reports Third-Quarter Revenue of $13.5 Billion

SANTA CLARA, Calif.--(BUSINESS WIRE)-- Intel Corporation today reported quarterly revenue of $13.5 billion, operating income of $3.8 billion, net income of $3.0 billion and EPS of $0.58. The company generated approximately $5.1 billion in cash from operations, paid dividends of $1.1 billion and used $1.2 billion to repurchase stock.

"Our third-quarter results reflected a continuing tough economic environment," said Paul Otellini, Intel president and CEO. "The world of computing is in the midst of a period of breakthrough innovation and creativity. As we look to the fourth quarter, we're pleased with the continued progress in Ultrabooks and phones and excited about the range of Intel-based tablets coming to market."


Q3 2012 Key Financial Information and Business Unit Trends (GAAP, unless otherwise stated)

  • PC Client Group revenue of $8.6 billion, flat sequentially and down 8 percent year-over-year
  • Data Center Group revenue of $2.7 billion, down 5 percent sequentially and up 6 percent year-over-year
  • Other Intel® architecture group revenue of $1.2 billion, up 6 percent sequentially and down 14 percent year-over-year
  • Gross margin of 63.3 percent, 1.3 percentage points above the midpoint of the company's updated expectation of 62 percent.
  • R&D plus MG&A spending $4.6 billion, unchanged.
  • Tax rate of 24 percent, below the company's expectation of approximately 28 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 Oct. 16.

Q4 2012 (GAAP, unless otherwise stated)

  • Revenue: $13.6 billion, plus or minus $500 million.
  • Gross margin percentage: 57 percent and 58 percent Non-GAAP (excluding amortization of acquisition-related intangibles), both plus or minus a couple of percentage points.
  • R&D plus MG&A spending: approximately $4.5 billion.
  • Amortization of acquisition-related intangibles: approximately $75 million.
  • Impact of equity investments and interest and other: approximately $75 million.
  • Depreciation: approximately $1.6 billion.
  • Tax Rate: approximately 27 percent.
  • Full-year capital spending: $11.3 billion, plus or minus $300 million.

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 Dec. 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 Oct. 23. Intel's Quiet Period will start from the close of business on Dec. 14 until publication of the company's fourth-quarter earnings release, scheduled for Jan. 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.

GAAP Financial Comparison
Quarterly
       Q3 2012      Q2 2012      vs. Q2 2012
Revenue      $13.5 billion      $13.5 billion      Flat
Gross Margin      63.3%      63.4%      Flat
Operating Income      $3.8 billion      $3.8 billion      Flat
Net Income      $3.0 billion      $2.8 billion      up 5.1%
Earnings Per Share      58 cents      54 cents      up 7.4%
Non-GAAP Financial Comparison
Quarterly
     Q3 2012    Q2 2012    vs. Q2 2012
Gross Margin    64.3%    64.4%    Flat
Operating Income    $4.1 billion    $4.1 billion    Flat
Net Income    $3.1 billion    $3.0 billion    up 4.8%
Earnings Per Share    60 cents    57 cents    up 5.3%

Non-GAAP results exclude the amortization of acquisition-related intangible
assets and the related income tax effect of these charges.

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. 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, including supply constraints and other disruptions affecting customers; 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. 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 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.

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 fourth quarter of 2012 on Jan. 17, 2013. Immediately following the earnings report, the company plans to publish a commentary by Stacy J. Smith, senior vice president and chief financial officer, 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 (NAS: 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, the Intel logo and Ultrabook 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 EndedNine Months Ended
Sept 29,Oct 1,Sept 29,Oct 1,
2012201120122011
NET REVENUE$13,457$14,233$39,864$40,112
Cost of sales 4,942 5,215 14,530 15,307
GROSS MARGIN 8,515 9,018 25,334 24,805
 
Research and development2,6052,1407,5196,042
Marketing, general and administrative 1,995 2,017 6,099 5,697
R&D AND MG&A4,6004,15713,61811,739
Amortization of acquisition-related intangibles 74 76 233 188
OPERATING EXPENSES 4,674 4,233 13,851 11,927
OPERATING INCOME3,8414,78511,48312,878
Gains (losses) on equity investments, net53928195
Interest and other, net 27 15 105 221
INCOME BEFORE TAXES3,9214,89211,66913,194
Provision for taxes 949 1,424 3,132 3,612
NET INCOME$2,972$3,468$8,537$9,582
 
BASIC EARNINGS PER COMMON SHARE$0.59$0.67$1.71$1.80
DILUTED EARNINGS PER COMMON SHARE$0.58$0.65$1.65$1.75
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC4,9965,1945,0065,317
DILUTED5,1535,3405,1815,466

INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions)
     
Sept 29,June 30,Dec 31,
201220122011
CURRENT ASSETS
Cash and cash equivalents$3,520$5,223$5,065
Short-term investments2,4833,9815,181
Trading assets4,4624,4444,591
Accounts receivable, net3,9383,5443,650
Inventories:
Raw materials614655644
Work in process2,3632,0681,680
Finished goods 2,342 2,181 1,772
5,3194,9044,096
Deferred tax assets1,6331,5171,700
Other current assets 1,659 2,172 1,589
TOTAL CURRENT ASSETS 23,014 25,785 25,872
 
Property, plant and equipment, net27,15725,97623,627
Marketable equity securities3,924599562
Other long-term investments469568889
Goodwill9,6239,4429,254
Identified intangible assets, net6,2215,9746,267
Other long-term assets 4,033 4,008 4,648
TOTAL ASSETS$74,441$72,352$71,119
 
CURRENT LIABILITIES
Short-term debt$56$92$247
Accounts payable3,1883,2692,956
Accrued compensation and benefits2,3202,0202,948
Accrued advertising1,0961,0601,134
Deferred income1,9541,9151,929
Other accrued liabilities 3,339 2,182 2,814
TOTAL CURRENT LIABILITIES 11,953 10,538 12,028
 
Long-term debt7,1007,0937,084
Long-term deferred tax liabilities2,9042,7752,617
Other long-term liabilities3,2153,1673,479
Stockholders' equity:
Preferred stock
Common stock and capital in excess of par value19,27818,88317,036
Accumulated other comprehensive income (loss)(501)(857)(781)
Retained earnings 30,492  Read Full Story

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