01—Abstract
Summary
Summary of the 10-Q filed April 29, 2013. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation's first quarter 2013 financial results show a decrease in net revenue and net income compared to the prior year.
Net revenue for the quarter ending March 30, 2013, was $12.58 billiona, down from $12.91 billion in the same period of 2012. Net income also declined to $2.045 billion, or $0.40 per diluted share, from $2.738 billion, or $0.53 per diluted share, in the first quarter of 2012. The decline in revenue was primarily attributed to a 6% decrease in platform volume within the PC Client Group (PCCG) and Data Center Group (DCG), signaling softness in traditional PC demand.
The gross margin percentage also saw a significant drop from 64.0% to 56.2%, largely due to increased start-up costs associated with the company's next-generation 14nm process technology and higher excess capacity charges. Despite these challenges, Intel generated robust operating cash flow of $4.285 billionb and continued to return capital to shareholders through dividends and share repurchases.
02—Key points
Key Highlights
- Net revenue for Q1 2013 decreased by 3% year-over-year to $12.58 billion.
- Net income for Q1 2013 declined by 25% year-over-year to $2.045 billion.
- Diluted earnings per share decreased to $0.40 from $0.53 in the prior year's quarter.
- Gross margin percentage dropped significantly from 64.0% to 56.2%, impacted by higher manufacturing start-up costs and excess capacity charges.
- The PC Client Group experienced a 6% decline in revenue, primarily due to lower platform unit sales.
- Operating cash flow remained strong at $4.285 billion for the quarter.
- Intel returned $1.1 billion in dividends and repurchased $533 million of common stock during the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2013, Intel Corp kept $0.16.
- Revenue$12.58B100.0%
- Cost of revenue−$5.51B43.8%
- Gross profit$7.07B56.2%
- Operating costs−$4.55B36.1%
- Operating income$2.52B20.0%
- Interest, other & tax−$474.0M3.8%
- Net income$2.04B16.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2013filed April 29, 2013Financial Statements
Q1 FY2013 against Q1 FY2012
| Line item | Q1 FY2013Q1 FY2012 | Change |
|---|---|---|
| Revenue | $12.58B$12.91B | −2.5% |
| Cost of Revenue | $5.51B$4.64B | +18.8% |
| Gross Profit | $7.07B$8.27B | −14.5% |
| R&D Expenses | $2.53B$2.40B | +5.2% |
| SG&A Expenses | $1.95B$1.97B | −1.3% |
| Operating Expenses | $4.55B$4.46B | +2.1% |
| Operating Income | $2.52B$3.81B | −33.9% |
| Interest Expense | $73.00M$31.00M | +135.5% |
| Net Income | $2.04B$2.74B | −25.3% |
| EPS (Basic) | $0.41$0.55 | −25.5% |
| EPS (Diluted) | $0.40$0.53 | −24.5% |
| Shares Outstanding (Basic) | 4.95B5.00B | −1.0% |
| Shares Outstanding (Diluted) | 5.08B5.19B | −2.2% |
05—Questions
Frequently Asked Questions
What is the primary reason for the decrease in Intel's revenue and net income in Q1 2013 compared to Q1 2012?
The decrease in revenue was primarily driven by lower platform unit sales in the PC Client Group and Data Center Group, reflecting softness in traditional PC demand. The decline in net income was exacerbated by lower gross margins, which were impacted by increased start-up costs for new manufacturing technologies (14nm process) and higher excess capacity charges.
How is Intel managing its manufacturing costs and investments in new technologies?
Intel is investing in its next-generation 14nm process technology, which led to higher start-up costs in Q1 2013. However, the company is also leveraging efficiency gains, such as reusing equipment from older technologies for newer ones, which allowed for a $1.0 billion reduction in forecasted capital expenditures for 2013. They are also exploring foundry services, shipping silicon to a foundry customer on their 22nm process technology and agreeing with Altera to manufacture on their 14nm process technology.
What is Intel's outlook for the second quarter of 2013?
Intel forecasts a revenue increase of approximately 3% from Q1 2013, which is slightly above normal seasonal trends. This is attributed to expected inventory replenishment in the PC supply chain due to the anticipated launch of their next-generation microarchitecture platforms, code-named Haswell, in Q2 2013. Gross margin percentage is expected to improve by about two percentage points compared to Q1 2013.
How is Intel returning capital to shareholders?
Intel continues to return capital to shareholders through dividend payments and share repurchases. In Q1 2013, they paid $1.1 billion in dividends and repurchased $533 million of common stock. The company also has an ongoing authorization for significant share repurchases, with $4.8 billion remaining available as of March 30, 2013.
06—Continue