10-KPeriod: FY2016

INTEL CORP Annual Report, Year Ended Dec 31, 2016

Filed February 17, 2017For Securities:INTC

Summary

Intel Corporation's 2016 10-K report highlights a significant year of transformation, marked by record revenue of $59.4 billion, an increase driven by the acquisition of Altera Corporation and growth in its Data Center Group (DCG) and Client Computing Group (CCG). The company is strategically shifting its focus from a PC-centric model to powering the cloud and a growing ecosystem of smart, connected devices. Key financial highlights include a gross margin of 60.9%, though down from the previous year due to acquisition-related amortization and factory start-up costs. Intel significantly increased its R&D spending to $12.7 billion, underscoring its commitment to technological innovation, particularly in areas like artificial intelligence, 5G, and autonomous driving. The company also initiated a substantial restructuring program aimed at reallocating resources to growth segments, impacting approximately 15,000 employees and expected to generate significant savings. Intel returned $7.5 billion to stockholders through dividends and share repurchases, demonstrating a commitment to shareholder returns while investing heavily in future growth.

Financial Highlights

57 data points
Beta

Revenue

$59.39B

61.0% Gross Margin

Net Income

$10.32B

17.4% Net Margin

EPS (Diluted)

$2.12

Total Assets

$113.33B

Cash & Equivalents

$5.56B

Free Cash Flow

$12.18B

Financial Statements
Beta
Revenue$59.39B
Cost of Revenue$23.15B
Gross Profit$36.23B
R&D Expenses$12.69B
SG&A Expenses$8.38B
Operating Expenses$23.10B
Operating Income$13.13B
Interest Expense$733.00M
Net Income$10.32B
EPS (Basic)$2.18
EPS (Diluted)$2.12
Shares Outstanding (Basic)4.73B
Shares Outstanding (Diluted)4.88B

Key Highlights

  • 1Record revenue of $59.4 billion in 2016, up 7% year-over-year, driven by Altera acquisition and growth in Data Center Group (DCG) and Client Computing Group (CCG).
  • 2Significant R&D investment of $12.7 billion, focusing on future growth areas like AI, 5G, and autonomous driving.
  • 3Initiated a 2016 Restructuring Program affecting ~15,000 employees to reallocate savings towards growth segments and improve efficiency.
  • 4Completed the strategic acquisition of Altera Corporation in Q1 2016, forming the Programmable Solutions Group (PSG) to enhance its offerings in data centers and IoT.
  • 5Announced plans to divest the Intel Security Group (ISecG) to focus on core strategic areas.
  • 6Returned approximately $7.5 billion to shareholders through dividends ($4.9 billion) and share repurchases ($2.6 billion).
  • 7Gross margin of 60.9% was impacted by acquisition-related charges and factory start-up costs, despite revenue growth.

Frequently Asked Questions

Intel's primary strategic focus in 2016 was to transform from a PC-centric company to one that powers the cloud and billions of smart, connected devices. This involved significant investments in its Data Center Group (DCG), Internet of Things Group (IOTG), and memory technologies, alongside continued innovation in client computing.

The acquisition of Altera Corporation in Q1 2016 contributed to record revenue and the formation of the Programmable Solutions Group (PSG). However, it also led to increased R&D and MG&A expenses, as well as amortization of acquisition-related charges, which impacted the overall gross margin percentage.

Intel is investing heavily in areas that extend its leadership in Moore's Law and expand market opportunities. Key growth areas include the Data Center, Internet of Things, memory technology (like 3D XPoint), artificial intelligence, 5G, and autonomous driving.

In 2016, Intel returned significant value to shareholders through $4.9 billion in dividend payments and $2.6 billion in common stock repurchases, reflecting its commitment to shareholder returns while managing its capital resources.