01—Abstract
Summary
Summary of the 10-Q filed August 8, 2011. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation reported strong revenue growth in the second quarter of 2011, with net revenue reaching $13.03 billiona, a 21% increase year-over-year.
This growth was driven by increased average selling prices for microprocessors, particularly in the PC Client Group, and the inclusion of revenue from recent acquisitions of McAfee and Infineon's Wireless Solutions (WLS) business. While gross margin percentage declined year-over-year due to increased startup costs for new manufacturing processes and amortization of acquisition-related intangibles, the company saw significant revenue increases in its PC Client Group and Data Center Group.
Despite a decrease in operating income percentage, Intel's strategic focus on expanding into new market segments like mobile communications, tablets, and security, supported by significant investments in R&D and acquisitions, positions it for future growth. The company also demonstrated strong cash generation from operations and provided an optimistic business outlook for the remainder of 2011, expecting further revenue growth.
02—Key points
Key Highlights
- Net revenue for Q2 2011 was $13.03 billion, a 21% increase compared to $10.77 billion in Q2 2010.
- Gross margin percentage decreased to 60.6% in Q2 2011 from 67.2% in Q2 2010, primarily due to higher startup costs and acquisition-related amortization.
- The acquisitions of McAfee and Infineon's WLS business contributed significantly to revenue in Q2 2011.
- R&D and Marketing, General & Administrative expenses increased year-over-year, reflecting investments in new technologies and growth areas.
- Data Center Group revenue increased by 15% year-over-year, driven by higher unit sales and ASPs.
- The company repurchased $2.0 billion of common stock and paid $1.0 billion in dividends during Q2 2011, demonstrating a commitment to returning capital to shareholders.
- Intel provided an optimistic business outlook for Q3 2011 and full-year 2011, expecting continued revenue growth and a rebound in gross margin percentage.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2011, Intel Corp kept $0.23.
- Revenue$13.03B100.0%
- Cost of revenue−$5.13B39.4%
- Gross profit$7.90B60.6%
- Operating costs−$3.97B30.4%
- Operating income$3.94B30.2%
- Interest, other & tax−$981.0M7.5%
- Net income$2.95B22.7%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2011filed August 8, 2011Financial Statements
Q3 FY2011 against Q3 FY2010
| Line item | Q3 FY2011Q3 FY2010 | Change |
|---|---|---|
| Revenue | $13.03B$11.10B | +17.4% |
| Cost of Revenue | $5.13B$3.78B | +35.7% |
| Gross Profit | $7.90B$7.32B | +7.9% |
| R&D Expenses | $1.99B$1.68B | +18.6% |
| SG&A Expenses | $1.91B$1.51B | +26.5% |
| Operating Expenses | $3.97B$3.19B | +24.6% |
| Operating Income | $3.94B$4.14B | −4.9% |
| Interest Expense | $0— | — |
| Net Income | $2.95B$2.96B | 0.0% |
| EPS (Basic) | $0.56$0.53 | +5.7% |
| EPS (Diluted) | $0.54$0.52 | +3.8% |
| Shares Outstanding (Basic) | 5.29B5.58B | −5.0% |
| Shares Outstanding (Diluted) | 5.44B5.69B | −4.4% |
05—Questions
Frequently Asked Questions
What were the key drivers of Intel's revenue growth in the second quarter of 2011?
Intel's revenue growth in Q2 2011 was driven by higher average selling prices (ASPs) for microprocessors, particularly within the PC Client Group, and the contribution of revenue from its recent acquisitions of McAfee and Infineon's Wireless Solutions (WLS) business. The Data Center Group also showed robust growth.
Why did Intel's gross margin percentage decrease year-over-year?
The decrease in gross margin percentage from 67.2% in Q2 2010 to 60.6% in Q2 2011 was primarily due to higher start-up costs associated with new manufacturing process technologies (22nm and 32nm factories) and increased amortization of acquisition-related intangible assets stemming from the McAfee and WLS acquisitions. Higher platform unit costs and inventory write-offs also contributed.
How did the acquisitions of McAfee and Infineon's WLS business impact Intel's financial results?
These acquisitions significantly impacted Intel's financial results in Q2 2011. They contributed approximately $1.0 billion to net revenue in the quarter. The acquisitions also led to increased operating expenses, including higher R&D and Marketing, General & Administrative costs, as well as a notable increase in amortization of acquisition-related intangibles.
What is Intel's outlook for the remainder of 2011?
Intel provided an optimistic outlook for the remainder of 2011. They expected Q3 2011 revenue to be between $13.5 billion and $14.5 billion and projected a full-year 2011 gross margin percentage of around 63%. The company also anticipated continued investment in R&D and capital expenditures to support future growth and technological leadership.
06—Continue