01—Abstract
Summary
Summary of the 10-Q filed April 30, 2009. Cited figures are marked; the original filing is the authoritative source.
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 billiona 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 $0.11b 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 $0.14c per share.
02—Key points
Key Highlights
- Net revenue declined by 26% year-over-year to $7.145 billion, reflecting a challenging macroeconomic environment.
- Diluted earnings per share decreased to $0.11 from $0.25 in the same period last year.
- Gross margin percentage fell to 45.3% from 53.8% year-over-year, impacted by factory underutilization and new process technology start-up costs.
- Operating expenses saw a reduction, with R&D spending down 10% and MG&A expenses down 11% year-over-year.
- The company announced restructuring plans involving closing assembly and test facilities and stopping production at certain wafer fabrication facilities.
- Intel continued its investment in new technologies, including the 32nm process technology, positioning for future market recovery.
- The company maintained a strong balance sheet, with cash and cash equivalents totaling $3.536 billion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2009, Intel Corp kept $0.09.
- Revenue$7.14B100.0%
- Cost of revenue−$3.91B54.7%
- Gross profit$3.24B45.3%
- Operating costs−$2.59B36.3%
- Operating income$647.0M9.1%
- Interest, other & tax−$18.0M0.3%
- Net income$629.0M8.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2009filed April 30, 2009Financial Statements
| 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 |
05—Questions
Frequently Asked Questions
What is the primary reason for the significant decline in Intel's revenue in Q1 2009?
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.
How is Intel managing its costs in response to the economic downturn?
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.
What is Intel's outlook for the gross margin percentage in the near term?
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.
How has Intel's investment portfolio performed, and what is the company's liquidity position?
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.
06—Continue