10-QPeriod: Q3 FY2009

INTEL CORP Quarterly Report for Q3 Ended Sep 26, 2009

Filed November 2, 2009For Securities:INTC

Summary

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.

Financial Highlights

49 data points
Beta

Revenue

$9.39B

57.6% Gross Margin

Net Income

$1.86B

19.8% Net Margin

EPS (Diluted)

$0.33

Total Assets

$51.00B

Cash & Equivalents

$4.11B

Free Cash Flow

$3.06B

Financial Statements
Beta
Revenue$9.39B
Cost of Revenue$3.98B
Gross Profit$5.40B
R&D Expenses$1.43B
SG&A Expenses$1.32B
Operating Expenses$2.83B
Operating Income$2.58B
Net Income$1.86B
EPS (Basic)$0.34
EPS (Diluted)$0.33
Shares Outstanding (Basic)5.54B
Shares Outstanding (Diluted)5.62B

Key Highlights

  • 1Net 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.
  • 2Diluted earnings per share for the third quarter of 2009 was $0.33, down from $0.35 in the same period of 2008.
  • 3The company generated $7.765 billion in cash from operating activities for the first nine months of 2009.
  • 4Intel acquired Wind River Systems Inc. in the third quarter of 2009 for $885 million.
  • 5Goodwill increased from $3.932 billion to $4.421 billion due to acquisitions.
  • 6Restructuring and asset impairment charges totaled $7 million for the third quarter of 2009 and $223 million for the nine months ended September 26, 2009.
  • 7The company repurchased 88.2 million shares of common stock for $1.7 billion during the first nine months of 2009.

Frequently Asked Questions

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.

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.

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.

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.