01—Abstract
Summary
Summary of the 10-K filed February 1, 2019. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation's 2018 10-K filing reveals a strong year of transformation and financial growth, marked by record revenue and earnings per share.
The company successfully advanced its strategy to shift from a PC-centric to a data-centric business, with data-centric segments collectively growing by 18%a and approaching 50% of total revenue. This growth was fueled by strong performance in the Data Center Group (DCG) and increased demand across key segments like cloud and communications service providers. The PC-Centric Group (CCG) also exceeded expectations with 9% growth, driven by leadership products and expansion into higher-growth market segments.
Despite facing challenges such as delays in its 10nm manufacturing process technology, Intel continued to innovate with its 14nm products. The company made significant investments in its data-centric future, including advancements in AI, autonomous driving, and 5G technologies, highlighted by the launch of second-generation Intel Xeon Scalable processors and Intel Optane DC persistent memory.
Additionally, Bob Swan was appointed CEO in January 2019, signaling leadership continuity during this transformative period. The company also demonstrated a commitment to returning capital to shareholders, with substantial dividend payments and share repurchases.
02—Key points
Key Highlights
- Record revenue of $70.8 billion in 2018, a 13% increase from 2017, driven by strong performance across all business segments.
- Data-centric businesses collectively grew 18% year-over-year, now representing nearly half of Intel's total revenue, indicating successful strategic transformation.
- Client Computing Group (CCG) achieved record revenue and operating income, growing 9% and exceeding expectations.
- Data Center Group (DCG) reported record revenue and operating income, with platform volume growth and higher ASPs driven by Xeon Scalable processors.
- Significant progress in 'big bets' including Intel Optane DC persistent memory, 5G modem development, and autonomous driving initiatives.
- Bob Swan appointed as Chief Executive Officer on January 30, 2019.
- Diluted EPS increased by 126% year-over-year to $4.48, reflecting strong operational leverage and a lower tax rate.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, Intel Corp kept $0.30.
- Revenue$70.85B100.0%
- Cost of revenue−$27.11B38.3%
- Gross profit$43.74B61.7%
- Operating costs−$20.42B28.8%
- Operating income$23.32B32.9%
- Interest, other & tax−$2.26B3.2%
- Net income$21.05B29.7%
Where FY2018 revenue went
$70.85B- Cost of revenue: $27.11B, 38% of revenue
- Net income: $21.05B, 30% of revenue
- R&D: $13.54B, 19% of revenue
- SG&A: $6.95B, 9.8% of revenue
- Interest, other & tax: $2.26B, 3.2% of revenue
Kept 30% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 1, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $70.85B$62.76B | +12.9% |
| Cost of Revenue | $27.11B$23.66B | +14.6% |
| Gross Profit | $43.74B$39.10B | +11.9% |
| R&D Expenses | $13.54B$13.04B | +3.9% |
| SG&A Expenses | $6.95B$7.45B | −6.7% |
| Operating Expenses | $20.42B$21.05B | −3.0% |
| Operating Income | $23.32B$18.05B | +29.2% |
| Interest Expense | $468.00M$646.00M | −27.6% |
| Net Income | $21.05B$9.60B | +119.3% |
| EPS (Basic) | $4.57$2.04 | +124.0% |
| EPS (Diluted) | $4.48$1.99 | +125.1% |
| Shares Outstanding (Basic) | 4.61B4.70B | −1.9% |
| Shares Outstanding (Diluted) | 4.70B4.83B | −2.8% |
05—Questions
Frequently Asked Questions
What is Intel's primary strategic focus for growth?
Intel's primary strategic focus is its transformation from a PC-centric to a data-centric company. This involves significant investment and growth in areas such as data centers, artificial intelligence (AI), autonomous driving, 5G, and the Internet of Things (IoT).
What were the key financial highlights for Intel in 2018?
Intel achieved record revenue of $70.8 billion, a 13% increase year-over-year. Diluted Earnings Per Share (EPS) rose significantly to $4.48, up 126% from 2017. The company saw strong growth in its data-centric businesses, which increased by 18% and now constitute nearly half of its total revenue.
What challenges did Intel face in 2018, particularly regarding manufacturing?
Intel experienced delays in the implementation of its 10nm manufacturing process technology, which impacted production timelines and led to supply constraints in certain areas. The company also noted that while its memory business improved, its profitability grew more slowly than expected due to market conditions and ongoing investments.
How is Intel returning capital to shareholders?
Intel returned capital to shareholders through a combination of dividends and share repurchases. In 2018, the company paid $5.5 billion in dividends and repurchased $10.7 billion of its common stock.
06—Continue