01—Abstract
Summary
Summary of the 10-K filed February 18, 2011. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation's 2010 10-K filing, filed in February 2011, highlights a record-breaking year with significant revenue growth and increased profitability.
The company demonstrated strong performance across its PC Client Group and Data Center Group segments, driven by new product introductions, particularly the 2nd generation Intel Core processor family, and strategic acquisitions. Intel is positioning itself as a comprehensive computing solutions provider, moving beyond its core chip manufacturing to offer integrated hardware and software platforms. The company's focus on innovation, as evidenced by its "tick-tock" technology development cadence and substantial R&D investments, is crucial for maintaining its competitive edge.
Intel is also strategically expanding into new market segments like mobile and embedded devices, anticipating the growing demand for connected computing experiences. The acquisition of Infineon's wireless business and the pending acquisition of McAfee underscore this strategy, aiming to bolster connectivity and security offerings.
02—Key points
Key Highlights
- Record year for Intel in 2010 with revenue growth of 24% ($43.6 billion) and significant improvement in gross margin percentage (65.3% vs. 55.7% in 2009), leading to record net income.
- Launched the 2nd generation Intel Core processor family (Sandy Bridge) using 32nm process technology, featuring integrated graphics, improved performance, and energy efficiency.
- Completed the acquisition of Infineon's Wireless Solutions (WLS) business, strengthening Intel's mobile communications and connectivity offerings.
- Announced intent to acquire McAfee for approximately $7.68 billion, aiming to enhance security solutions by integrating hardware and software.
- Significant R&D investment of $6.6 billion in 2010, focused on advanced computing technologies, manufacturing process improvements (22nm technology development), and platform enhancements.
- Increased capital spending to $9.0 billion planned for 2011, primarily for 22nm process technology manufacturing capacity, indicating a commitment to leading-edge facilities.
- Return of capital to stockholders through dividends ($3.5 billion) and share repurchases ($1.5 billion) in 2010, reflecting strong cash generation ($16.7 billion from operations).
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Intel Corp kept $0.26.
- Revenue$43.62B100.0%
- Cost of revenue−$15.13B34.7%
- Gross profit$28.49B65.3%
- Operating costs−$12.90B29.6%
- Operating income$15.59B35.7%
- Interest, other & tax−$4.12B9.5%
- Net income$11.46B26.3%
Where FY2010 revenue went
$43.62B- Cost of revenue: $15.13B, 35% of revenue
- Net income: $11.46B, 26% of revenue
- R&D: $6.58B, 15% of revenue
- SG&A: $6.31B, 14% of revenue
- Interest, other & tax: $4.12B, 9.5% of revenue
Kept 26% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed February 18, 2011Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $43.62B$35.13B | +24.2% |
| Cost of Revenue | $15.13B$15.57B | −2.8% |
| Gross Profit | $28.49B$19.56B | +45.7% |
| R&D Expenses | $6.58B$5.65B | +16.3% |
| SG&A Expenses | $6.31B$7.93B | −20.5% |
| Operating Expenses | $12.90B$13.85B | −6.8% |
| Operating Income | $15.59B$5.71B | +172.9% |
| Interest Expense | $0$1.00M | −100.0% |
| Net Income | $11.46B$4.37B | +162.4% |
| EPS (Basic) | $2.06$0.79 | +160.8% |
| EPS (Diluted) | $2.01$0.77 | +161.0% |
| Shares Outstanding (Basic) | 5.55B5.56B | 0.0% |
| Shares Outstanding (Diluted) | 5.70B5.64B | +0.9% |
05—Questions
Frequently Asked Questions
What were Intel's key strategic moves and product highlights for 2010?
Intel achieved record financial results in 2010, driven by strong sales and the launch of its 2nd generation Intel Core processor family. Strategically, the company focused on expanding its offerings into mobile and security markets through acquisitions, notably completing the acquisition of Infineon's wireless business and announcing the planned acquisition of McAfee. These moves signal Intel's commitment to becoming a provider of complete computing solutions, emphasizing energy-efficient performance, connectivity, and security.
How did Intel's financial performance compare to the previous year, and what were the main drivers?
Intel's financial performance in 2010 showed significant improvement over 2009. Net revenue increased by 24% to $43.6 billion, and gross margin percentage rose from 55.7% to 65.3%. This growth was primarily attributed to higher microprocessor and chipset unit sales, improved average selling prices for microprocessors, lower platform unit costs, and reduced factory underutilization charges. These factors contributed to Intel's most profitable year on record.
What is Intel's outlook for 2011, and what are the key investment areas?
Intel projected mid- to high-teen revenue growth for 2011, with a gross margin percentage of approximately 63%. The company planned to invest heavily in R&D ($8.2 billion) and capital expenditures ($9.0 billion), primarily for developing and ramping its 22nm process technology. These investments are aimed at supporting growth opportunities across various computing segments and maintaining leadership in silicon manufacturing.
What were the significant risk factors mentioned in the filing that could impact Intel's future performance?
Key risks identified include fluctuations in product demand due to economic conditions and competition, rapid technological changes requiring quick product responses, intense industry competition, potential litigation and regulatory proceedings, and risks associated with global operations, including supply chain disruptions and varying international regulations. The company also highlighted the financial impact of product defects and the need to manage intellectual property effectively.
06—Continue