10-KPeriod: FY2007

INTEL CORP Annual Report, Year Ended Dec 29, 2007

Filed February 20, 2008For Securities:INTC

Summary

Intel Corporation's 2007 annual report highlights a year of significant revenue growth and operational improvements. Net revenue increased by 8% to $38.3 billion, driven by a 16% increase in mobile microprocessor revenue and growth in chipsets. The company successfully managed operating expenses, with R&D and SG&A decreasing as a percentage of revenue, leading to a substantial increase in operating income. Intel continued its investment in technological advancement, including the transition to its 45nm process technology and planning for its next-generation microarchitecture. The company also focused on efficiency improvements, including a restructuring program that involved workforce reductions and the divestiture of lower-margin businesses, such as the planned exit from NOR flash memory. Intel demonstrated a strong financial position with $19.3 billion in its investment portfolio, reflecting healthy cash flows from operations. The company also returned value to shareholders through dividends and significant stock repurchases.

Financial Highlights

30 data points
Beta

Revenue

$38.33B

51.9% Gross Margin

Net Income

$6.98B

18.2% Net Margin

EPS (Diluted)

$1.18

Cash & Equivalents

$7.31B

Free Cash Flow

$7.63B

Financial Statements
Beta
Revenue$38.33B
Cost of Revenue$18.43B
Gross Profit$19.90B
R&D Expenses$5.75B
SG&A Expenses$5.40B
Operating Expenses$11.69B
Operating Income$8.22B
Net Income$6.98B
EPS (Basic)$1.20
EPS (Diluted)$1.18
Shares Outstanding (Basic)5.82B
Shares Outstanding (Diluted)5.94B

Key Highlights

  • 1Net revenue grew 8% to $38.3 billion, with mobile microprocessor revenue up 16% year-over-year.
  • 2Operating income increased significantly by 45% to $8.2 billion, driven by revenue growth and improved operating expense management.
  • 3The company advanced its technological leadership with the ramp of its 45nm process technology and preparation for its next-generation microarchitecture.
  • 4A restructuring program was in place, impacting workforce and leading to the divestiture of lower-margin businesses, including the planned exit from NOR flash memory.
  • 5Intel repurchased $2.75 billion of its stock and paid $2.6 billion in dividends.
  • 6The company maintained a strong liquidity position with $19.3 billion in its investment portfolio.
  • 7Gross margin percentage remained stable at approximately 51.9%.

Frequently Asked Questions

Intel reported a net revenue of $38.3 billion in 2007, an increase of 8% compared to $35.4 billion in 2006. This growth was primarily driven by higher microprocessor unit sales and a significant increase in mobile microprocessor revenue, which rose by 16%.

Intel successfully managed its expenses in 2007. R&D and marketing, general and administrative expenses decreased from 34% of revenue in 2006 to 29% in 2007, largely due to a restructuring program that included workforce reductions. This efficiency improvement, combined with revenue growth, led to a substantial increase in operating income, which grew 45% to $8.2 billion.

Intel's strategy focuses on being the preeminent provider of semiconductor chips and platforms for the digital economy. Key strategies include customer orientation, energy-efficient performance, and leadership in design and manufacturing technology, exemplified by their 'tick-tock' cadence of introducing new microarchitectures and process technologies. In 2007, they transitioned to the Intel Core microarchitecture and began manufacturing using their 45nm process technology. They also plan to divest their NOR flash memory assets in early 2008, expecting this to negatively impact revenue but benefit gross margin percentage.

Intel returned capital to shareholders through both dividends and share repurchases. The company paid cash dividends totaling $2.6 billion in 2007. Additionally, Intel repurchased approximately 111 million shares of its common stock for $2.75 billion under its ongoing repurchase program.