01—Abstract
Summary
Summary of the 10-Q filed August 3, 2009. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation reported a net loss of $398 milliona, or $0.07 per share, for the second quarter of 2009.
This loss was significantly impacted by a €1.06 billion ($1.447 billionb) fine imposed by the European Commission for alleged antitrust violations, which is being appealed. Despite the net loss, the company generated strong cash flow from operations of $3.8 billion for the first half of the year, demonstrating resilience in a challenging economic environment. Net revenue for the quarter decreased by 15% year-over-year to $8.02 billion, reflecting the ongoing global economic slowdown.
However, sequential revenue growth was observed, driven by an increase in microprocessor and chipset sales and the ramp-up of Intel Atom processors. Intel's gross margin percentage for the quarter was 50.8%c, down from 55.4% in the prior year, primarily due to lower average selling prices and factory underutilization charges. The company is managing its expenses, with R&D spending decreasing year-over-year, though Marketing, General, and Administrative (MG&A) expenses increased significantly due to the European Commission fine.
Intel's financial position remains solid, with $11.3 billiond in cash, cash equivalents, and short-term investments as of June 27, 2009. The company also completed the acquisition of Wind River Systems Inc. for $884 million to bolster its embedded software capabilities.
02—Key points
Key Highlights
- Net loss of $398 million ($0.07 per share) for Q2 2009, heavily impacted by a $1.447 billion EU fine.
- Net revenue of $8.02 billion for Q2 2009, down 15% year-over-year, but showed sequential improvement.
- Gross margin percentage declined to 50.8% from 55.4% in Q2 2008.
- Operating income turned to a loss of $12 million from an income of $2.26 billion in Q2 2008.
- Generated $3.76 billion in cash from operating activities for the first six months of 2009.
- Completed the acquisition of Wind River Systems Inc. for $884 million.
- Investments in available-for-sale debt instruments showed unrealized losses of $165 million.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q2 FY2009, Intel Corp lost $0.05.
- Revenue$8.02B100.0%
- Cost of revenue−$3.94B49.2%
- Gross profit$4.08B50.8%
- Operating costs−$4.09B51.0%
- Operating income−$12.0M0.1%
- Interest, other & tax−$386.0M4.8%
- Net income−$398.0M5.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2009filed August 3, 2009Financial Statements
Q2 FY2009 against Q2 FY2008
| Line item | Q2 FY2009Q2 FY2008 | Change |
|---|---|---|
| Revenue | $8.02B$9.47B | −15.3% |
| Cost of Revenue | $3.94B$4.22B | −6.5% |
| Gross Profit | $4.08B$5.25B | −22.3% |
| R&D Expenses | $1.30B$1.47B | −11.2% |
| SG&A Expenses | $2.69B$1.43B | +88.5% |
| Operating Expenses | $4.09B$2.99B | +36.6% |
| Operating Income | -$12.00M$2.25B | −100.5% |
| Net Income | -$398.00M$1.60B | −124.9% |
| EPS (Basic) | $-0.07$0.28 | −125.0% |
| EPS (Diluted) | $-0.07$0.28 | −125.0% |
| Shares Outstanding (Basic) | 5.59B5.70B | −1.8% |
| Shares Outstanding (Diluted) | 5.59B5.80B | −3.5% |
05—Questions
Frequently Asked Questions
What was Intel's financial performance in Q2 2009?
Intel reported a net loss of $398 million, or $0.07 per share, for the second quarter of 2009. Net revenue was $8.02 billion, a 15% decrease compared to the same period in 2008. The company experienced a significant increase in Marketing, General, and Administrative expenses due to a €1.06 billion ($1.447 billion) fine imposed by the European Commission, which Intel is appealing.
What is the impact of the European Commission fine on Intel?
The European Commission imposed a fine of €1.06 billion ($1.447 billion) on Intel for alleged antitrust violations. This fine was recorded as a charge in the second quarter of 2009, significantly contributing to the net loss and increasing MG&A expenses. The company disagrees with the decision and has filed an appeal.
How did Intel's operational segments perform?
The Digital Enterprise Group (DEG) saw its net revenue decrease by 20% year-over-year to $4.3 billion, with operating income falling to $0 (compared to $1.7 billion in Q2 2008). The Mobility Group (MG) experienced an 8% decline in net revenue to $3.48 billion and its operating income dropped to $0 (from $1.25 billion in Q2 2008), partly due to factory underutilization charges and increased startup costs related to new technologies.
What is Intel's liquidity position?
Intel maintained a strong liquidity position, with cash and cash equivalents, short-term investments, and trading assets totaling $11.3 billion as of June 27, 2009. The company generated $3.76 billion in cash from operating activities during the first half of 2009, indicating a solid ability to meet its financial obligations.
06—Continue