01—Abstract
Summary
Summary of the 10-K filed January 24, 2020. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation's 2019 10-K filing reveals a year of continued transformation towards a data-centric company, marked by record revenue of $72.0 billiona.
While the PC-centric business remained flat, the data-centric segments, representing nearly half of the revenue, saw a 3% increase, driven by strong demand in cloud, enterprise, and communication services. The company made significant investments in R&D ($13.4 billionb) and capital expenditures ($16.2 billion) to support its strategic shift and technological advancements, including the ramp-up of its 10nm manufacturing process and the acquisition of Habana Labs to bolster its AI capabilities. Intel's strategic priorities include leading key technology inflections like AI, network transformation (5G), and the intelligent edge, while also focusing on operational excellence and talent development.
The company returned substantial capital to stockholders through dividends ($5.6 billionc) and share repurchases ($13.6 billion). Despite challenges such as NAND pricing pressure and supply constraints in the PC market, Intel remains focused on executing its multi-year strategy to capitalize on the growing data economy and maintain its position as a leading semiconductor manufacturer.
02—Key points
Key Highlights
- Record revenue of $72.0 billion in 2019, with data-centric businesses accounting for nearly 50% of total revenue.
- Significant investment in R&D ($13.4 billion) and capital expenditures ($16.2 billion) to drive technological innovation and capacity expansion.
- Continued transition to a data-centric company, with growth in Data Center Group (DCG), Internet of Things Group (IOTG), and Mobileye segments.
- Successful launch and ramp-up of 10nm manufacturing process for key products like 10th Gen Intel Core processors.
- Acquisition of Habana Labs for approximately $1.7 billion to strengthen AI portfolio.
- Exit from the 5G smartphone modem business to focus on network and edge infrastructure opportunities.
- Returned $5.6 billion in dividends and $13.6 billion in share repurchases to stockholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Intel Corp kept $0.29.
- Revenue$71.97B100.0%
- Cost of revenue−$29.82B41.4%
- Gross profit$42.14B58.6%
- Operating costs−$20.11B27.9%
- Operating income$22.04B30.6%
- Interest, other & tax−$987.0M1.4%
- Net income$21.05B29.2%
Where FY2019 revenue went
$71.97B- Cost of revenue: $29.82B, 41% of revenue
- Net income: $21.05B, 29% of revenue
- R&D: $13.36B, 19% of revenue
- SG&A: $6.35B, 8.8% of revenue
- Other operating costs: $393.0M, 0.5% of revenue
- Interest, other & tax: $987.0M, 1.4% of revenue
Kept 29% as net incomeOther operating costs $393.0M · 0.5%Interest, other & tax $987.0M · 1.4%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed January 24, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $71.97B$70.85B | +1.6% |
| Cost of Revenue | $29.82B$27.11B | +10.0% |
| Gross Profit | $42.14B$43.74B | −3.7% |
| R&D Expenses | $13.36B$13.54B | −1.3% |
| SG&A Expenses | $6.35B$6.95B | −8.6% |
| Operating Expenses | $20.11B$20.42B | −1.5% |
| Operating Income | $22.04B$23.32B | −5.5% |
| Interest Expense | $489.00M$468.00M | +4.5% |
| Net Income | $21.05B$21.05B | 0.0% |
| EPS (Basic) | $4.77$4.57 | +4.4% |
| EPS (Diluted) | $4.71$4.48 | +5.1% |
| Shares Outstanding (Basic) | 4.42B4.61B | −4.2% |
| Shares Outstanding (Diluted) | 4.47B4.70B | −4.9% |
05—Questions
Frequently Asked Questions
What was Intel's overall financial performance in 2019?
Intel achieved record revenue of $72.0 billion in 2019, a 2% increase from 2018. Operating income was $22.0 billion, down 5% from 2018, reflecting increased investments and market pressures. Diluted EPS was $4.71, up 5% from the prior year.
How is Intel's business transitioning from PC-centric to data-centric?
The company's data-centric businesses, including the Data Center Group (DCG), Internet of Things Group (IOTG), and Mobileye, collectively grew 3% and represented nearly half of Intel's total revenue in 2019. This shift is supported by new product introductions and strategic acquisitions like Habana Labs, aimed at capitalizing on growth in AI, cloud, and edge computing.
What were Intel's key strategic investments and capital allocation priorities?
Intel invested $13.4 billion in R&D and $16.2 billion in capital expenditures to advance its manufacturing technology (e.g., 10nm ramp) and product portfolio. The company's capital allocation priorities focused on investing in the business, strategic acquisitions, and returning capital to stockholders through dividends and share repurchases, totaling $19.2 billion in 2019.
What challenges did Intel face in 2019?
Intel encountered challenges including supply constraints, particularly in the value segment of the PC market, and pricing pressure in the NAND memory market, which led to an operating loss in the Non-Volatile Memory Solutions Group (NSG). The company also noted increasing competition across its product segments.
06—Continue