01—Abstract
Summary
Summary of the 10-Q filed October 31, 2008. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation (INTC) reported its third-quarter 2008 results, showcasing robust financial performance despite a challenging macroeconomic environment.
Net revenue for the quarter reached $10.2 billiona, a slight increase of 1% year-over-year, driven by strong performance in microprocessors and chipsets, particularly within the Mobility Group, which saw an 18% revenue increase. The company also demonstrated significant improvement in profitability, with gross margin percentage climbing to 58.9% from 51.2% in the prior year's third quarter, primarily due to improved manufacturing costs and a more favorable product mix following divestitures of lower-margin businesses. Operationally, Intel highlighted strong gross profit dollars and operating income growth, up 16% and 44% respectively compared to the third quarter of 2007.
This was supported by strategic R&D investments and a focus on energy-efficient performance, including the introduction of the Intel Atom processor family. However, the company also reported significant losses on equity investments, largely driven by impairment charges on its investment in Numonyx, reflecting ongoing challenges in the flash memory market. Despite these headwinds, Intel maintained a strong balance sheet and generated substantial cash flow from operations, positioning it to navigate economic uncertainties.
02—Key points
Key Highlights
- Net revenue for Q3 2008 was $10.2 billion, a 1% increase year-over-year.
- Gross margin percentage improved significantly to 58.9% in Q3 2008 from 51.2% in Q3 2007.
- Operating income increased by 44% year-over-year to $3.1 billion in Q3 2008.
- The Mobility Group saw an 18% increase in net revenue, driven by higher microprocessor unit sales.
- Significant impairment charges were recorded on equity investments, primarily due to a $250 million charge related to the Numonyx investment.
- The company generated $8.3 billion in cash from operations for the first nine months of 2008.
- Intel repurchased $7.1 billion of its stock and paid $2.3 billion in dividends during the first nine months of 2008.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2008, Intel Corp kept $0.20.
- Revenue$10.22B100.0%
- Cost of revenue−$4.20B41.1%
- Gross profit$6.02B58.9%
- Operating costs−$2.92B28.6%
- Operating income$3.10B30.3%
- Interest, other & tax−$1.08B10.6%
- Net income$2.01B19.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2008filed October 31, 2008Financial Statements
| Revenue | $10.22B |
| Cost of Revenue | $4.20B |
| Gross Profit | $6.02B |
| R&D Expenses | $1.47B |
| SG&A Expenses | $1.42B |
| Operating Expenses | $2.92B |
| Operating Income | $3.10B |
| Net Income | $2.01B |
| EPS (Basic) | $0.36 |
| EPS (Diluted) | $0.35 |
| Shares Outstanding (Basic) | 5.60B |
| Shares Outstanding (Diluted) | 5.69B |
05—Questions
Frequently Asked Questions
How did Intel's revenue and profitability perform in the third quarter of 2008 compared to the previous year?
Intel reported net revenue of $10.2 billion for Q3 2008, a slight 1% increase from $10.09 billion in Q3 2007. Profitability saw a significant improvement, with gross margin percentage rising to 58.9% from 51.2% in the prior year's quarter. Operating income surged by 44% to $3.1 billion, reflecting better cost management and a more favorable product mix.
What were the key drivers for the revenue growth in the Mobility Group?
The Mobility Group's revenue increased by 18% year-over-year, primarily driven by a significant rise in microprocessor unit sales, partly due to the ramp-up of the new Atom microprocessors. This growth was partially offset by lower average selling prices for microprocessors.
What is the impact of the impairment charges on Intel's financial results?
Intel recorded substantial losses on equity investments, totaling $396 million in Q3 2008, largely due to impairment charges. A significant portion of this ($250 million) was an impairment on the Numonyx investment due to a downturn in the NOR flash memory market. These charges negatively impacted net income.
How is Intel managing its cash flow and capital resources in the current economic climate?
Intel generated strong cash flow from operations, amounting to $8.3 billion for the first nine months of 2008. The company also actively managed its capital through significant stock repurchases ($7.1 billion in the first nine months) and dividend payments ($2.3 billion). Intel maintained a high-quality investment portfolio and confirmed its ability to access credit markets, indicating sufficient liquidity to meet its financial needs.
06—Continue