- Revenue: $13.6 billion, plus or minus $500 million.
- Gross margin percentage: 62 percent and 63 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 $4.6 billion.
- Amortization of acquisition-related intangibles: approximately $80 million.
- Impact of equity investments and interest and other: loss of approximately $20 million.
- Depreciation: approximately $1.6 billion.
- Gross margin percentage: 64 percent and 65 percent Non-GAAP (excluding amortization of acquisition-related intangibles), both plus or minus a few percentage points, unchanged.
- Spending (R&D plus MG&A): $18.3 billion, plus or minus $200 million, unchanged.
- Amortization of acquisition-related intangibles: approximately $300 million, unchanged.
- Depreciation: $6.4 billion, plus or minus $100 million, down $100 million from prior expectations.
- Tax Rate: approximately 28 percent down from prior expectations of 29 percent.
- Full-year capital spending: $12.5 billion, plus or minus $400 million, unchanged.
|GAAP Financial Comparison|
|Q1 2012||Q4 2011||vs. Q4 2011|
|Revenue||$12.9 billion||$13.9 billion||down 7%|
|Gross Margin||64.0%||64.5%||down 0.5 pts.|
|Operating Income||$3.8 billion||$4.6 billion||down 17%|
|Net Income||$2.7 billion||$3.4 billion||down 19%|
|Earnings Per Share||53 cents||64 cents||down 17%|
|Non-GAAP Financial Comparison|
|Q1 2012||Q4 2011||vs. Q4 2011|
|Gross Margin||65.1%||65.4%||down 0.3 pts.|
|Operating Income||$4.0 billion||$4.8 billion||down 16%|
|Net Income||$2.9 billion||$3.5 billion||down 18%|
|Earnings Per Share||56 cents||67 cents||down 16%|
|Non-GAAP results exclude the amortization of acquisition-relatedintangible assets and the related income tax effect of these charges.|
- PC Client Group revenue of $8.5 billion, down 7 percent sequentially.
- Data Center Group revenue of $2.5 billion, down 10 percent sequentially.
- Other Intel® architecture group revenue of $1.1 billion, down 2 percent sequentially.
- The first quarter of 2012 includes full-quarter revenue contributions from last year’s McAfee and Infineon Wireless Solutions acquisitions of $935 million.
- The first quarter of 2012 had 13 weeks while the first quarter of 2011 had 14 weeks.
- 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.
- Intel is in the process of transitioning to its next generation of products on 22nm process technology, and there could be execution and timing issues associated with these changes, including products defects and errata and lower than anticipated manufacturing yields.
- 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 Intel’s non-marketable equity investment portfolio balance is concentrated in companies in the flash memory market segment, and declines in this market segment or changes in management’s plans with respect to Intel’s investments in this market segment could result in significant impairment charges, impacting restructuring charges as well as gains/losses on equity investments and interest and other.
- 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 WebcastIntel 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 2012 on July 17. 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 (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|
|March 31,||Dec. 31,||April 2,|
|Cost of sales||4,641||4,935||4,962|
|Research and development||2,401||2,308||1,916|
|Marketing, general and administrative||1,973||1,973||1,775|
|R&D AND MG&A||4,374||4,281||3,691|
|Amortization of acquisition-related intangibles||81||72||36|
|Gains (losses) on equity investments, net||(19)||17||28|
|Interest and other, net||23||(29)||185|
|INCOME BEFORE TAXES||3,814||4,587||4,371|
|Provision for taxes||1,076||1,227||1,211|
|BASIC EARNINGS PER COMMON SHARE||$||0.55||$||0.66||$||0.58|
|DILUTED EARNINGS PER COMMON SHARE||$||0.53||$||0.64||$||0.56|
|WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:|
|CONSOLIDATED SUMMARY BALANCE SHEET DATA|
|March 31,||Dec. 31,|
|Cash and cash equivalents||$||4,429||$||5,065|
|Accounts receivable, net||4,037||3,650|
|Work in process||2,048||1,680|
|Deferred tax assets||1,794||1,700|
|Other current assets||1,348||1,589|
|TOTAL CURRENT ASSETS||25,421||25,872|
|Property, plant and equipment, net||25,027||23,627|
|Marketable equity securities||819||562|
|Other long-term investments||498||889|
|Identified intangible assets, net||6,064||6,267|
|Other long-term assets||4,600||4,648|
|Accrued compensation and benefits||1,498||2,948|
|Other accrued liabilities||3,992||2,814|
|TOTAL CURRENT LIABILITIES||11,941||12,028|
|Long-term deferred tax liabilities||2,793||2,617|
|Other long-term liabilities||3,235||3,479|
|Common stock and capital in excess of par value||18,381||17,036|
|Accumulated other comprehensive income (loss)||(604||)||(781||)|
|TOTAL STOCKHOLDERS' EQUITY||46,760||45,911|
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY||$||71,817||$||71,119|
|SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION|
|Q1 2012||Q4 2011||Q1 2011|
|Cash and short-term investments||$9,441||$10,246||$7,724|
|Trading assets - marketable debt securities (1)||4,312||4,591||3,734|
|Total cash investments||$13,753||$14,837||$11,458|
|Trading assets - equity securities (2)||—||—||$520|
|Total trading assets - sum of 1+2||$4,312||$4,591||$4,254|
|CURRENT DEFERRED INCOME:|
|Deferred income on shipments of components to distributors||$814||$751||$826|
|Deferred income from software and services group||1,187||1,178||987|
|Total current deferred income||$2,001||$1,929||$1,813|
|SELECTED CASH FLOW INFORMATION:|
|Amortization of intangibles||$266||$256||$155|
|Investments in non-marketable equity instruments||($116)||($124)||($147)|
|Stock repurchase program||($1,500)||($4,133)||($4,000)|
|Proceeds from sales of shares to employees & excess tax benefit||$1,263||$1,129||$240|
|Net cash received/(used) for divestitures/acquisitions||($176)||($244)||($8,166)|
|EARNINGS PER COMMON SHARE INFORMATION:|
|Weighted average common shares outstanding - basic||4,999||5,069||5,452|
|Dilutive effect of employee equity incentive plans||126||115||102|
|Dilutive effect of convertible debt||67||58||52|
|Weighted average common shares outstanding - diluted||5,192||5,242||5,606|
|Cumulative shares repurchased (in billions)||4.1||4.1||3.6|
|Remaining dollars authorized for buyback (in billions)||$8.6||$10.1||$10.2|
|Employees (in thousands)||100.8||100.1||93.5|
|SUPPLEMENTAL OPERATING GROUP RESULTS|
|($ in millions)|
|Three Months Ended|
|March 31,||Dec. 31,||April 2,|
|PC Client Group||$||8,451||$||9,047||$||8,621|
|Data Center Group||2,453||2,717||2,464|
|Other Intel Architecture Group||1,075||1,099||1,149|
|Intel Architecture Group||11,979||12,863||12,234|
|Software and Services Group||571||578||240|
|TOTAL NET REVENUE||$||12,906||$||13,887||$||12,847|
|Operating income (loss)|
|PC Client Group||$||3,483||$||3,952||$||3,543|
|Data Center Group||1,143||1,453||1,222|
|Other Intel Architecture Group||(312)||(368)||(36)|
|Intel Architecture Group||$||4,314||$||5,037||$||4,729|
|Software and Services Group||7||16||(52)|
|TOTAL OPERATING INCOME||$||3,810||$||4,599||$||4,158|
|Our operating groups shown above are comprised of the following:|
|• PC Client Group: Delivering platforms designed for the notebook and desktop (including high-end enthusiast PCs) market segments; and wireless 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:|
|• Intel Mobile Communications: Delivering mobile phone components such as baseband processors, radio frequency transceivers, and power management chips.|
|• Intelligent Systems Group (formerly Embedded and Communications Group): Delivering platforms designed for embedded applications.|
|• Netbook and Tablet Group: Delivering platforms for the netbook and tablet market segments.|
|• Ultra-Mobility Group: Delivering products designed for the smartphone 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 groups. • Divested businesses and results of seed businesses that support our initiatives. • Acquisition-related costs, including amortization and any impairment of acquisition-related intangibles and goodwill.|
|SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP RESULTS|
|In addition to disclosing financial results in accordance with United States (U.S.) generally accepted accounting principles (GAAP), this document contains non-GAAP financial measures that we believe are helpful in understanding and comparing our past financial performance and our expectations for future results. The non-GAAP financial measures disclosed by the company exclude the amortization of acquisition-related intangible assets, as well as the related income tax effect. Amortization of acquisition-related intangible assets consists of the amortization of developed technology, trade names, and customer relationships acquired in connection with business combinations. We record charges relating to the amortization of these intangibles in our GAAP financial statements. Amortization charges for our acquisition-related intangible assets are inconsistent in size and are significantly impacted by the timing and valuation of our acquisitions. Consequently, our non-GAAP adjustment excludes these charges to facilitate an evaluation of our current operating performance and comparisons to our past operating performance.|
|Set forth below are reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. The non-GAAP financial measures disclosed by the company have limitations and should not be considered a substitute for, or superior to, financial measures prepared in accordance with GAAP, and the financial results prepared in accordance with GAAP and reconciliations from these results should be carefully evaluated. Management believes the non-GAAP financial measures are appropriate for period to period comparisons in our budget, planning and evaluation processes, and to show the reader how our performance compares to other periods.|
|(In millions, except per share amounts)|
|Three Months Ended|
|March 31,||Dec. 31,||April 2,|
|GAAP GROSS MARGIN||$||8,265||$||8,952||$||7,885|
|Adjustment for the amortization of acquisition-related intangibles||137||137||74|
|NON-GAAP GROSS MARGIN||$||8,402||$||9,089||$||7,959|
|GAAP GROSS MARGIN PERCENTAGE||64.0%||64.5%||61.4%|
|Adjustment for the amortization of acquisition-related intangibles||1.1%||0.9%||0.6%|
|NON-GAAP GROSS MARGIN PERCENTAGE||65.1%||65.4%||62.0%|
|GAAP OPERATING INCOME||$||3,810||$||4,599||$||4,158|
|Adjustment for the amortization of acquisition-related intangibles||218||209||110|
|NON-GAAP OPERATING INCOME||$||4,028||$||4,808||$||4,268|
|GAAP NET INCOME||$||2,738||$||3,360||$||3,160|
|Amortization of acquisition-related intangibles||218||209||110|
|Income tax effect||(73)||(46)||(31)|
|NON-GAAP NET INCOME||$||2,883||$||3,523||$||3,239|
|GAAP DILUTED EARNINGS PER COMMON SHARE||$||0.53||$||0.64||$||0.56|
|Amortization of acquisition-related intangibles||0.04||0.04||0.02|
|Income tax effect||(0.01)||(0.01)||-|
|NON-GAAP DILUTED EARNINGS PER COMMON SHARE||$||0.56||$||0.67||$||0.58|
|SUPPLEMENTAL RECONCILIATIONS OF GAAP TO NON-GAAP OUTLOOK|
|Set forth below are reconciliations of the non-GAAP financial measure to the most directly comparable GAAP financial measure. The non-GAAP financial measure disclosed by the company has limitations and should not be considered a substitute for, or superior to, the financial measure prepared in accordance with GAAP, and the financial outlook prepared in accordance with GAAP and the reconciliations from this outlook should be carefully evaluated. Please refer to "Supplemental Reconciliations of GAAP to non-GAAP Results" in this document for a detailed explanation of the adjustment made to the comparable GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide useful information for investors.|
|Q2 2012 Outlook||2012 Outlook|
|GAAP GROSS MARGIN PERCENTAGE||62%||+/- a couple percentage points||64%||+/- a few percentage points|
|Adjustment for the amortization of acquisition-related intangibles||1%||1%|
|NON-GAAP GROSS MARGIN PERCENTAGE||63%||+/- a couple percentage points||65%||+/- a few percentage points|