10-QPeriod: Q2 FY2008

INTEL CORP Quarterly Report for Q2 Ended Jun 28, 2008

Filed August 1, 2008For Securities:INTC

Summary

Intel Corporation reported strong financial results for the quarter ending June 28, 2008. Net revenue increased by 9% year-over-year to $9.47 billion, driven by robust microprocessor unit sales, particularly in the mobile segment. Gross margin significantly improved to 55.4% from 46.9% in the prior year, reflecting higher unit sales and improved manufacturing efficiencies, partially offset by lower average selling prices for microprocessors. Net income rose by 25% to $1.60 billion, with diluted earnings per share increasing to $0.28 from $0.22. The company also highlighted the growing importance of its Mobility Group, which for the first time exceeded the Desktop segment in microprocessor shipments. Intel continued its focus on innovation, with progress in its 45nm process technology and the launch of the Intel Atom processor family to address the growing netbook market. Significant stock repurchases and dividend payments were made during the period, demonstrating a commitment to returning capital to shareholders.

Financial Highlights

26 data points
Beta

Revenue

$9.47B

55.4% Gross Margin

Net Income

$1.60B

16.9% Net Margin

EPS (Diluted)

$0.28

Cash & Equivalents

$4.08B

Free Cash Flow

$2.98B

Financial Statements
Beta
Revenue$9.47B
Cost of Revenue$4.22B
Gross Profit$5.25B
R&D Expenses$1.47B
SG&A Expenses$1.43B
Operating Expenses$2.99B
Operating Income$2.25B
Net Income$1.60B
EPS (Basic)$0.28
EPS (Diluted)$0.28
Shares Outstanding (Basic)5.70B
Shares Outstanding (Diluted)5.80B

Key Highlights

  • 1Net revenue grew 9% year-over-year to $9.47 billion, driven by increased microprocessor unit sales.
  • 2Gross margin improved significantly to 55.4% compared to 46.9% in the prior year, indicating enhanced manufacturing efficiency and product mix.
  • 3Net income increased 25% to $1.60 billion, with diluted EPS rising to $0.28 from $0.22.
  • 4The Mobility Group's microprocessor shipments surpassed the Digital Enterprise Group's for the first time, signaling a strategic shift in demand.
  • 5Intel launched its low-power Intel Atom processors to capitalize on the emerging netbook market.
  • 6The company repurchased $5.0 billion in stock and paid $1.5 billion in dividends during the first half of the year.
  • 7Restructuring and asset impairment charges were $96 million for the quarter, with the company expecting further declines.

Frequently Asked Questions

The primary driver of Intel's revenue growth in the second quarter of 2008 was a significant increase in microprocessor unit sales, particularly within the mobile segment. This was partially offset by lower average selling prices for microprocessors.

Intel's gross margin percentage improved substantially to 55.4% in Q2 2008 from 46.9% in Q2 2007. This improvement was largely attributed to higher microprocessor unit sales and improved manufacturing efficiencies, especially with the 45nm process technology, as well as favorable product mix within the Digital Enterprise Group.

The fact that Intel's Mobility Group microprocessor shipments exceeded those of the Digital Enterprise Group (which includes desktop and enterprise processors) for the first time indicates a significant market shift towards mobile computing. This highlights the growing demand for processors in laptops and other portable devices, a trend Intel is actively addressing with new product lines like the Intel Atom.

Intel is involved in several significant legal proceedings. These include an ongoing antitrust lawsuit filed by Advanced Micro Devices (AMD) and related consumer class actions, investigations by regulatory bodies like the European Commission and the Korea Fair Trade Commission concerning marketing and pricing practices, and shareholder derivative lawsuits. While Intel disputes these claims and intends to defend vigorously, an unfavorable outcome could materially harm the company's financial position or operations.