01—Abstract
Summary
Summary of the 10-Q filed July 30, 2010. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation's 10-Q filing for the quarter ended June 26, 2010, reveals a robust recovery and significant growth compared to the previous year.
The company reported record quarterly revenue and strong profitability, driven by an increase in microprocessor and chipset unit sales and higher average selling prices, particularly in the PC Client and Data Center segments. This performance was supported by the successful ramp-up of new 32-nanometer microprocessor products, contributing to a record gross margin. Despite increased research and development spending, overall operating expenses were managed effectively, aided by a significant decrease in marketing, general and administrative expenses due to a large European Commission fine in the prior year.
The company maintains a strong financial position with substantial cash and investments, and generated significant cash flow from operations. Intel is also actively managing its investment portfolio and returned capital to shareholders through dividends. The outlook for the remainder of 2010 remains positive, with expectations for continued revenue growth and stable gross margins, supported by ongoing product innovation and a strategic focus on silicon technology leadership.
02—Key points
Key Highlights
- Record quarterly revenue of $10.765 billion, a 34% increase year-over-year, driven by strong demand in PC Client and Data Center segments.
- Significant improvement in profitability with operating income of $3.981 billion, a substantial turnaround from a $12 million loss in the prior year's quarter.
- Gross margin improved dramatically to 67.2% from 50.8% in the prior year's quarter, reflecting improved pricing, lower costs, and reduced excess capacity charges.
- Earnings per diluted share rose to $0.51, a significant increase from a loss of $(0.07) in the comparable prior year period.
- Total assets grew to $57.691 billion, with a strong increase in cash and equivalents and short-term investments, indicating healthy liquidity.
- The company is actively investing in new technologies, evidenced by an increase in capital spending outlook for 2010 related to the 32-nanometer process technology ramp.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2010, Intel Corp kept $0.27.
- Revenue$10.77B100.0%
- Cost of revenue−$3.53B32.8%
- Gross profit$7.24B67.2%
- Operating costs−$3.25B30.2%
- Operating income$3.98B37.0%
- Interest, other & tax−$1.09B10.2%
- Net income$2.89B26.8%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2010filed July 30, 2010Financial Statements
Q2 FY2010 against Q2 FY2009
| Line item | Q2 FY2010Q2 FY2009 | Change |
|---|---|---|
| Revenue | $10.77B$8.02B | +34.2% |
| Cost of Revenue | $3.53B$3.94B | −10.5% |
| Gross Profit | $7.24B$4.08B | +77.4% |
| R&D Expenses | $1.67B$1.30B | +27.9% |
| SG&A Expenses | $1.58B$2.69B | −41.2% |
| Operating Expenses | $3.25B$4.09B | −20.5% |
| Operating Income | $3.98B-$12.00M | +33275.0% |
| Net Income | $2.89B-$398.00M | +825.4% |
| EPS (Basic) | $0.52$-0.07 | +842.9% |
| EPS (Diluted) | $0.51$-0.07 | +828.6% |
| Shares Outstanding (Basic) | 5.56B5.59B | −0.6% |
| Shares Outstanding (Diluted) | 5.71B5.59B | +2.1% |
05—Questions
Frequently Asked Questions
What was Intel's financial performance in the second quarter of 2010 compared to the same period in 2009?
Intel experienced a significant turnaround in its financial performance. Net revenue increased by 34% to $10.765 billion in Q2 2010 from $8.024 billion in Q2 2009. Operating income shifted from a loss of $12 million to a profit of $3.981 billion. Diluted earnings per share improved from a loss of $(0.07) to $0.51.
What were the key drivers for the revenue growth in the second quarter of 2010?
The revenue growth was primarily driven by a substantial increase in microprocessor and chipset unit sales, coupled with higher average selling prices. This was particularly strong in the PC Client Group and Data Center Group segments, supported by the ramp-up of new 32-nanometer products and improved demand from enterprise and small business sectors.
How did Intel's gross margin perform, and what contributed to the improvement?
Intel's gross margin percentage saw a significant improvement, reaching a record 67.2% in Q2 2010, up from 50.8% in Q2 2009. This was attributed to higher revenue, lower platform unit costs, reduced excess capacity charges compared to the prior year, and lower start-up costs associated with new product ramps.
What is the company's outlook for the remainder of 2010?
Intel provided a positive outlook for the remainder of 2010. For Q3 2010, they projected revenue between $11.2 billion and $12.0 billion, and a gross margin percentage around 67%. For the full year 2010, they anticipated a gross margin percentage of approximately 66%, increased R&D and SG&A expenses, and capital spending of around $5.2 billion, reflecting investments in new process technologies.
06—Continue