10-QPeriod: Q1 FY2009

INTEL CORP Quarterly Report for Q1 Ended Mar 28, 2009

Filed April 30, 2009For Securities:INTC

Summary

Intel Corporation's first quarter of 2009 filing (ending March 27, 2009) reveals a significant year-over-year decline in net revenue, down 26% to $7.145 billion from $9.673 billion in Q1 2008. This downturn is attributed to the weak global economy, reduced PC demand, and inventory corrections within the supply chain. Consequently, net income also saw a substantial drop, with diluted earnings per share falling to $0.11 from $0.25 in the prior year quarter. Despite the revenue challenges, Intel has focused on operational adjustments, including reducing headcount and streamlining manufacturing operations. The company also highlights its continued investment in research and development, particularly in its 32nm process technology, and its strategic focus on platform solutions and energy-efficient performance. The company also declared a quarterly dividend of $0.14 per share.

Financial Highlights

27 data points
Beta

Revenue

$7.14B

45.3% Gross Margin

Net Income

$629.00M

8.8% Net Margin

EPS (Diluted)

$0.11

Cash & Equivalents

$3.54B

Free Cash Flow

-$1.13B

Financial Statements
Beta
Revenue$7.14B
Cost of Revenue$3.91B
Gross Profit$3.24B
R&D Expenses$1.32B
SG&A Expenses$1.20B
Operating Expenses$2.59B
Operating Income$647.00M
Net Income$629.00M
EPS (Basic)$0.11
EPS (Diluted)$0.11
Shares Outstanding (Basic)5.57B
Shares Outstanding (Diluted)5.63B

Key Highlights

  • 1Net revenue declined by 26% year-over-year to $7.145 billion, reflecting a challenging macroeconomic environment.
  • 2Diluted earnings per share decreased to $0.11 from $0.25 in the same period last year.
  • 3Gross margin percentage fell to 45.3% from 53.8% year-over-year, impacted by factory underutilization and new process technology start-up costs.
  • 4Operating expenses saw a reduction, with R&D spending down 10% and MG&A expenses down 11% year-over-year.
  • 5The company announced restructuring plans involving closing assembly and test facilities and stopping production at certain wafer fabrication facilities.
  • 6Intel continued its investment in new technologies, including the 32nm process technology, positioning for future market recovery.
  • 7The company maintained a strong balance sheet, with cash and cash equivalents totaling $3.536 billion.

Frequently Asked Questions

The primary reasons cited for the significant decline in revenue are the weak worldwide economy, reduced demand for personal computers (PCs), and an inventory correction within the supply chain. These factors led to lower unit sales of microprocessors and chipsets across all geographic regions.

Intel is implementing several cost-management strategies, including reducing its workforce by approximately 1,400 employees, closing manufacturing and assembly/test facilities, and stopping production at certain wafer fabrication plants. R&D and Marketing, General & Administrative expenses have also been reduced year-over-year.

For the second quarter of 2009, Intel expects its gross margin percentage to be in the mid-40s. While expected to improve from Q1 2009 due to increased factory utilization, this will be partially offset by the product mix, costs associated with products manufactured during periods of lower factory utilization, and ongoing start-up costs for its new 32nm process technology.

Intel maintained a strong investment portfolio valued at $12.8 billion as of March 28, 2009, with a high credit quality. Other-than-temporary impairments on available-for-sale debt instruments were limited. The company reported $3.536 billion in cash and cash equivalents, indicating a solid liquidity position sufficient to meet business requirements for the next 12 months.