01—Abstract
Summary
Summary of the 10-Q filed November 2, 2009. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation's third-quarter 2009 performance showed a sequential improvement driven by better-than-expected demand for microprocessors and chipsets, benefiting from a recovering global economy and supply chain inventory replenishment.
While revenue declined year-over-year due to the challenging economic environment, the rate of decline improved compared to previous quarters. The company also saw a positive impact on its gross margin percentage, partly due to higher sales volumes, lower unit costs, and reduced factory underutilization charges, although this was partially offset by inventory write-offs for new 32nm products. Financially, Intel demonstrated solid cash generation from operations, even after paying a significant European Commission fine.
The company actively managed its capital through the issuance of convertible debt, which was used to repurchase stock. Investments in capital assets continue to support strategic objectives. Looking ahead, Intel anticipates continued sequential revenue growth in the fourth quarter, supported by seasonal trends and the ongoing ramp of its new 32nm processor technology, which is expected to drive improved performance and cost efficiencies.
02—Key points
Key Highlights
- Net revenue for the third quarter of 2009 was $9.389 billion, a decrease of 8% compared to $10.217 billion in the third quarter of 2008.
- Diluted earnings per share for the third quarter of 2009 was $0.33, down from $0.35 in the same period of 2008.
- The company generated $7.765 billion in cash from operating activities for the first nine months of 2009.
- Intel acquired Wind River Systems Inc. in the third quarter of 2009 for $885 million.
- Goodwill increased from $3.932 billion to $4.421 billion due to acquisitions.
- Restructuring and asset impairment charges totaled $7 million for the third quarter of 2009 and $223 million for the nine months ended September 26, 2009.
- The company repurchased 88.2 million shares of common stock for $1.7 billion during the first nine months of 2009.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2009, Intel Corp kept $0.20.
- Revenue$9.39B100.0%
- Cost of revenue−$3.98B42.4%
- Gross profit$5.40B57.6%
- Operating costs−$2.83B30.1%
- Operating income$2.58B27.5%
- Interest, other & tax−$723.0M7.7%
- Net income$1.86B19.8%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2009filed November 2, 2009Financial Statements
Q3 FY2009 against Q3 FY2008
| Line item | Q3 FY2009Q3 FY2008 | Change |
|---|---|---|
| Revenue | $9.39B$10.22B | −8.1% |
| Cost of Revenue | $3.98B$4.20B | −5.1% |
| Gross Profit | $5.40B$6.02B | −10.2% |
| R&D Expenses | $1.43B$1.47B | −2.8% |
| SG&A Expenses | $1.32B$1.42B | −6.7% |
| Operating Expenses | $2.83B$2.92B | −3.3% |
| Operating Income | $2.58B$3.10B | −16.8% |
| Net Income | $1.86B$2.01B | −7.8% |
| EPS (Basic) | $0.34$0.36 | −5.6% |
| EPS (Diluted) | $0.33$0.35 | −5.7% |
| Shares Outstanding (Basic) | 5.54B5.60B | −1.2% |
| Shares Outstanding (Diluted) | 5.62B5.69B | −1.3% |
05—Questions
Frequently Asked Questions
How did Intel's revenue perform in the third quarter of 2009 compared to the previous year?
Intel's net revenue for the third quarter of 2009 was $9.389 billion, an 8% decrease compared to $10.217 billion in the third quarter of 2008. This decline was attributed to lower unit sales for most microprocessor and chipset products, partially offset by the ramp of Intel Atom processors and chipsets. Average selling prices also decreased due to the lower-priced Atom processors.
What was the impact of the European Commission fine on Intel's financial results?
Intel incurred a charge of $1.447 billion in the second quarter of 2009 as a result of a fine imposed by the European Commission. This charge significantly impacted the company's profitability and operating expenses for the nine-month period, increasing the Marketing, General and Administrative expenses and raising the effective tax rate due to its non-deductible nature.
How did Intel manage its cash and capital during the quarter?
Intel generated strong cash flow from operations ($4.0 billion in Q3 2009). The company issued $2.0 billion of convertible debt and used the proceeds to repurchase $1.7 billion of common stock. Additionally, Intel returned $771 million to shareholders through dividends and invested $944 million in capital assets.
What is the outlook for Intel's gross margin percentage in the near term?
Intel expected its gross margin percentage to increase in the fourth quarter of 2009, rising to 62% (plus or minus three points). This was driven by higher microprocessor sales volume, lower factory underutilization charges, and the qualification of 32nm products for sale.
06—Continue