01—Abstract
Summary
Summary of the 10-Q filed May 9, 2011. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation's first quarter 2011 results, filed on May 8, 2011, showcased robust growth with net revenue reaching $12.85 billiona, a significant 25% increase year-over-year.
This surge was driven by strong microprocessor unit sales and higher average selling prices, coupled with contributions from recent acquisitions. Net income also saw a substantial rise to $3.16 billionb, translating to diluted earnings per share of $0.56. The company highlighted its strategic focus on expanding into new market segments, including smartphones and tablets, with new product introductions like the Intel Atom processor Z670 platform.
Significant investments in research and development, including the advancement of 22nm process technology with the "Ivy Bridge" processors and the introduction of the "Tri-Gate" transistor design, underscore Intel's commitment to maintaining its technology leadership. The company raised its full-year capital spending outlook to $10.2 billionc to support these advancements.
02—Key points
Key Highlights
- Net revenue for the quarter reached $12.85 billion, up 25% year-over-year, marking a record quarter for revenue.
- Net income rose to $3.16 billion, with diluted earnings per share of $0.56, also a record.
- Completed significant acquisitions of McAfee Inc. for $6.7 billion and Infineon's Wireless Solutions (WLS) business for $1.4 billion, expanding into security and mobile communications.
- Launched the Intel Atom processor Z670 platform, codenamed "Oak Trail," targeting the tablet market.
- Advanced its manufacturing technology with the 22nm process technology and the introduction of the "Tri-Gate" transistor design for "Ivy Bridge" processors.
- Increased full-year capital expenditure forecast to $10.2 billion to support technological advancements.
- Managed a $654 million product recall/repair program related to a chipset design issue, with $343 million recorded in Q1 2011.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2011, Intel Corp kept $0.25.
- Revenue$12.85B100.0%
- Cost of revenue−$4.96B38.6%
- Gross profit$7.88B61.4%
- Operating costs−$3.73B29.0%
- Operating income$4.16B32.4%
- Interest, other & tax−$998.0M7.8%
- Net income$3.16B24.6%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2011filed May 9, 2011Financial Statements
Q2 FY2011 against Q2 FY2010
| Line item | Q2 FY2011Q2 FY2010 | Change |
|---|---|---|
| Revenue | $12.85B$10.77B | +19.3% |
| Cost of Revenue | $4.96B$3.53B | +40.6% |
| Gross Profit | $7.88B$7.24B | +9.0% |
| R&D Expenses | $1.92B$1.67B | +15.0% |
| SG&A Expenses | $1.77B$1.58B | +12.1% |
| Operating Expenses | $3.73B$3.25B | +14.5% |
| Operating Income | $4.16B$3.98B | +4.4% |
| Interest Expense | $6.00M— | — |
| Net Income | $3.16B$2.89B | +9.5% |
| EPS (Basic) | $0.58$0.52 | +11.5% |
| EPS (Diluted) | $0.56$0.51 | +9.8% |
| Shares Outstanding (Basic) | 5.45B5.56B | −2.0% |
| Shares Outstanding (Diluted) | 5.61B5.71B | −1.8% |
05—Questions
Frequently Asked Questions
What were the key drivers of Intel's revenue growth in Q1 2011?
Revenue growth was primarily driven by significantly higher microprocessor unit sales and increased average selling prices. The acquisitions of McAfee and Infineon's Wireless Solutions (WLS) business also contributed approximately $500 million to the revenue in the quarter.
How did the acquisitions of McAfee and WLS impact Intel's financial results?
The acquisitions of McAfee and WLS were completed in Q1 2011. McAfee was acquired for $6.7 billion, adding significant goodwill and intangible assets, and contributing approximately $500 million to net revenue. The WLS business was acquired for $1.4 billion, strengthening Intel's mobile communications offerings and also contributing to revenue.
What is the significance of the "chipset design issue" mentioned in the report?
Intel identified a design issue with its Intel 6 Series Express Chipset family, affecting products sold in late 2010 and early 2011. The company incurred a total estimated cost of $654 million to repair and replace affected materials and systems. A charge of $343 million was recorded in Q1 2011 for this issue, impacting gross margin by approximately 3 percentage points.
What is Intel's outlook for capital expenditures and technological development?
Intel increased its full-year capital spending forecast to $10.2 billion to support its lead in process technology, focusing on 22nm and 14nm technologies, including building a larger scale 14nm fabrication facility. The company also highlighted its 'tick-tock' technology development cadence and the advancement to 3D transistor design ('Tri-Gate') with its 'Ivy Bridge' processors.
06—Continue