10-QPeriod: Q2 FY2009

INTEL CORP Quarterly Report for Q2 Ended Jun 27, 2009

Filed August 3, 2009For Securities:INTC

Summary

Intel Corporation reported a net loss of $398 million, or $0.07 per share, for the second quarter of 2009. This loss was significantly impacted by a €1.06 billion ($1.447 billion) 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%, 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 billion 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.

Financial Highlights

48 data points
Beta

Revenue

$8.02B

50.8% Gross Margin

Net Income

-$398.00M

-5.0% Net Margin

EPS (Diluted)

$-0.07

Total Assets

$49.06B

Cash & Equivalents

$3.83B

Free Cash Flow

$2.40B

Financial Statements
Beta
Revenue$8.02B
Cost of Revenue$3.94B
Gross Profit$4.08B
R&D Expenses$1.30B
SG&A Expenses$2.69B
Operating Expenses$4.09B
Operating Income-$12.00M
Net Income-$398.00M
EPS (Basic)$-0.07
EPS (Diluted)$-0.07
Shares Outstanding (Basic)5.59B
Shares Outstanding (Diluted)5.59B

Key Highlights

  • 1Net loss of $398 million ($0.07 per share) for Q2 2009, heavily impacted by a $1.447 billion EU fine.
  • 2Net revenue of $8.02 billion for Q2 2009, down 15% year-over-year, but showed sequential improvement.
  • 3Gross margin percentage declined to 50.8% from 55.4% in Q2 2008.
  • 4Operating income turned to a loss of $12 million from an income of $2.26 billion in Q2 2008.
  • 5Generated $3.76 billion in cash from operating activities for the first six months of 2009.
  • 6Completed the acquisition of Wind River Systems Inc. for $884 million.
  • 7Investments in available-for-sale debt instruments showed unrealized losses of $165 million.

Frequently Asked Questions

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.

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.

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.

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.