01—Abstract
Summary
Summary of the 10-Q filed July 29, 2013. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation reported a decrease in net revenue and net income for the second quarter and first six months of 2013 compared to the same periods in 2012.
The decline in revenue was primarily driven by softness in the PC market, although the Data Center Group saw a slight increase in revenue year-over-year. Gross margin percentage also declined due to increased startup costs for next-generation manufacturing processes and lower overall revenue. The company is navigating a challenging PC market impacted by the rise of ultra-mobile devices and is investing in its Atom microarchitecture for these segments.
Despite the revenue headwinds, Intel generated significant operating cash flow. The company is actively managing its capital resources, returning cash to shareholders through dividends and share repurchases, while also maintaining a substantial investment portfolio.
Intel anticipates a flat revenue for the full year 2013, reflecting a slower than expected macroeconomic recovery and ongoing market shifts. The company is also making strategic adjustments, including re-directing resources to focus on Atom microarchitecture-based products and advanced SoC integration.
02—Key points
Key Highlights
- Net revenue for Q2 2013 was $12.811 billion, a 5% decrease from Q2 2012.
- Net income for Q2 2013 was $2.000 billion, a decrease from $2.827 billion in Q2 2012.
- Gross margin percentage declined to 58.3% in Q2 2013 from 63.4% in Q2 2012, impacted by higher manufacturing startup costs.
- PC Client Group revenue decreased by 7% year-over-year, reflecting softness in traditional PC demand.
- Data Center Group revenue saw a slight increase of $9 million year-over-year, driven by growth in cloud and high-performance computing.
- The company expects full-year 2013 revenue to be approximately flat compared to 2012.
- Intel returned $1.1 billion in dividends and repurchased $550 million in common stock during Q2 2013.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2013, Intel Corp kept $0.16.
- Revenue$12.81B100.0%
- Cost of revenue−$5.34B41.7%
- Gross profit$7.47B58.3%
- Operating costs−$4.75B37.1%
- Operating income$2.72B21.2%
- Interest, other & tax−$719.0M5.6%
- Net income$2.00B15.6%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2013filed July 29, 2013Financial Statements
Q2 FY2013 against Q2 FY2012
| Line item | Q2 FY2013Q2 FY2012 | Change |
|---|---|---|
| Revenue | $12.81B$13.50B | −5.1% |
| Cost of Revenue | $5.34B$4.95B | +8.0% |
| Gross Profit | $7.47B$8.55B | −12.7% |
| R&D Expenses | $2.52B$2.51B | +0.1% |
| SG&A Expenses | $2.17B$2.13B | +1.6% |
| Operating Expenses | $4.75B$4.72B | +0.6% |
| Operating Income | $2.72B$3.83B | −29.0% |
| Interest Expense | $60.00M$21.00M | +185.7% |
| Net Income | $2.00B$2.83B | −29.3% |
| EPS (Basic) | $0.40$0.56 | −28.6% |
| EPS (Diluted) | $0.39$0.54 | −27.8% |
| Shares Outstanding (Basic) | 4.98B5.02B | −0.9% |
| Shares Outstanding (Diluted) | 5.11B5.20B | −1.8% |
05—Questions
Frequently Asked Questions
What were the primary drivers of the revenue decline in Q2 2013?
The primary drivers of the revenue decline in Q2 2013 were a 5% decrease in PC Client Group platform unit volume and softness in traditional PC demand. This was partially offset by slight growth in the Data Center Group.
What is impacting Intel's gross margin percentage?
The gross margin percentage was impacted by increased start-up costs for next-generation 14nm process technology, higher pre-qualification product costs, and lower platform revenue. These factors were partially offset by improvements in non-qualified product costs and higher platform volumes.
How is Intel addressing the shift towards ultra-mobile devices?
Intel is re-directing resources to place greater emphasis on its Intel Atom microarchitecture-based products, aiming to move them faster to leading-edge silicon technology and focusing on SoC integration of key components like graphics and communications. The company also launched its 4th generation Intel Core Processor family for notebooks, desktops, and tablets, and announced new Intel Atom processors for ultra-mobile form factors.
What is Intel's outlook for the full year 2013?
Intel now expects full-year 2013 revenue to be approximately flat compared to 2012. This revised outlook reflects anticipated improvements in macroeconomic conditions in the second half of the year, but at a slower pace than previously expected, and the ongoing impact of the PC market shift towards ultra-mobile devices.
06—Continue