Summary
Intel Corporation reported net revenue of $8.85 billion for the first quarter of 2007, a slight decrease from $8.94 billion in the prior year's first quarter. While overall revenue was flat, this masked a notable shift in segment performance, with the Digital Enterprise Group seeing a revenue decline and the Mobility Group experiencing growth. Despite flat revenue, Intel's profitability was impacted by a decrease in gross margin to 50.1% from 55.3% year-over-year, primarily driven by declines in the Digital Enterprise and Flash Memory Groups. However, operating expenses were reduced significantly due to headcount reduction and efficiency efforts. The company also saw a substantial improvement in its effective income tax rate due to a settlement with the IRS. Diluted earnings per share rose to $0.28 from $0.23 in the prior year.
Key Highlights
- 1Net revenue for Q1 2007 was $8.85 billion, down slightly from $8.94 billion in Q1 2006.
- 2Gross margin percentage decreased to 50.1% in Q1 2007 from 55.3% in Q1 2006, impacting overall profitability.
- 3Operating expenses were reduced by $677 million year-over-year, driven by lower R&D and M, G&A spending, and headcount reductions.
- 4Diluted earnings per share increased to $0.28 in Q1 2007 from $0.23 in Q1 2006.
- 5The company repurchased $400 million in common stock during the quarter, compared to $2.9 billion in the prior year's quarter, and declared a dividend of $0.225 per share.
- 6Significant investments were made in new fabrication facilities in China and Vietnam, and retooling of a New Mexico facility.
- 7Restructuring and asset impairment charges totaled $75 million in Q1 2007, primarily related to employee severance and an underperforming facility.