01—Abstract
Summary
Summary of the 10-Q filed October 28, 2013. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation's (INTC) third-quarter 2013 report indicates revenue and net income holding relatively steady compared to the same period last year, with net revenue at $13.483 billiona and net income at $2.950 billion.
However, year-over-year for the first nine months, net revenue declined slightly by 2% to $38.874 billionb, and net income saw a more significant drop of 18% to $6.995 billion. This performance reflects ongoing challenges in the PC market, evidenced by a 3% revenue decline in the PC Client Group, while the Data Center Group showed strength with a 12% year-over-year revenue increase. The company is actively managing its operational structure and future investments, as demonstrated by $124 million in restructuring and asset impairment charges related to workforce reductions and business exits.
Intel is also investing heavily in R&D, particularly in mobile and emerging technologies, as evidenced by a 5%c increase in R&D spending year-over-year for the quarter. The company continues to navigate the shift in computing devices, emphasizing new processor families like 'Haswell' and 'Bay Trail' for PCs, tablets, and convertibles, while also exploring ultra-low power architectures like 'Intel Quark' for the Internet of Things. Intel's liquidity remains strong, with substantial cash and investments, though a net decrease in cash and cash equivalents was observed for the nine-month period, largely due to increased investing activities.
The company is also actively returning capital to shareholders through dividends and share repurchases, albeit at a slower pace for repurchases compared to the previous year. Investors should monitor the impact of the ongoing transition in the PC market, the company's investment in new product lines and manufacturing technologies (like 14nm process), and the resolution of ongoing legal proceedings.
02—Key points
Key Highlights
- Net revenue for the third quarter of 2013 was $13.483 billion, nearly flat year-over-year ($13.457 billion).
- Net income for the third quarter of 2013 was $2.950 billion, a slight decrease from $2.972 billion in the prior year.
- The PC Client Group (PCCG) revenue decreased by 3% year-over-year to $8.387 billion, reflecting softness in traditional PC demand.
- The Data Center Group (DCG) showed robust growth, with revenue up 12% year-over-year to $2.912 billion, driven by record unit sales.
- Intel incurred $124 million in restructuring and asset impairment charges in Q3 2013 related to workforce reductions and business exits.
- Research and Development (R&D) expenses increased by 5% year-over-year to $2.742 billion for the quarter, highlighting investment in new technologies.
- The company reported a net decrease in cash and cash equivalents of $3.597 billion for the first nine months of 2013, primarily due to increased investing activities.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2013, Intel Corp kept $0.22.
- Revenue$13.48B100.0%
- Cost of revenue−$5.07B37.6%
- Gross profit$8.41B62.4%
- Operating costs−$4.91B36.4%
- Operating income$3.50B26.0%
- Interest, other & tax−$554.0M4.1%
- Net income$2.95B21.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2013filed October 28, 2013Financial Statements
Q3 FY2013 against Q3 FY2012
| Line item | Q3 FY2013Q3 FY2012 | Change |
|---|---|---|
| Revenue | $13.48B$13.46B | +0.2% |
| Cost of Revenue | $5.07B$4.94B | +2.6% |
| Gross Profit | $8.41B$8.52B | −1.2% |
| R&D Expenses | $2.74B$2.60B | +5.3% |
| SG&A Expenses | $1.97B$2.00B | −1.3% |
| Operating Expenses | $4.91B$4.67B | +5.0% |
| Operating Income | $3.50B$3.84B | −8.8% |
| Interest Expense | $56.00M$14.00M | +300.0% |
| Net Income | $2.95B$2.97B | −0.7% |
| EPS (Basic) | $0.59$0.59 | 0.0% |
| EPS (Diluted) | $0.58$0.58 | 0.0% |
| Shares Outstanding (Basic) | 4.98B5.00B | −0.3% |
| Shares Outstanding (Diluted) | 5.10B5.15B | −1.0% |
05—Questions
Frequently Asked Questions
How did Intel's revenue and profitability perform in the third quarter of 2013 compared to the previous year?
In the third quarter of 2013, Intel reported net revenue of $13.483 billion, which was nearly flat compared to $13.457 billion in the same period of 2012. Net income was $2.950 billion, a slight decrease from $2.972 billion in the prior year's third quarter. This indicates a stable top-line performance but a minor dip in profitability for the quarter.
What were the key segment performances, and what is driving them?
The PC Client Group (PCCG), Intel's largest segment, saw its revenue decline by 3% year-over-year to $8.387 billion due to softening demand in the traditional PC market. Conversely, the Data Center Group (DCG) demonstrated strong growth, with revenue increasing by 12% year-over-year to $2.912 billion, driven by strong demand in cloud computing and high-performance computing markets.
What is Intel doing to address the challenges in the PC market and invest in future growth areas?
Intel is addressing the PC market challenges through product innovation, such as the launch of its 4th generation Intel Core processor family ('Haswell') and 'Bay Trail' designs for tablets and convertibles. The company is also significantly investing in R&D, with a 5% year-over-year increase in R&D expenses for the quarter, focusing on emerging technologies like ultra-low power architectures ('Intel Quark') for the Internet of Things, smartphones, and tablets. Additionally, Intel incurred $124 million in restructuring charges to streamline operations and focus resources.
How is Intel managing its cash and capital resources?
Intel maintained a strong liquidity position, with approximately $19.1 billion in cash, cash equivalents, short-term investments, and trading assets at the end of the third quarter of 2013. However, for the first nine months of 2013, there was a net decrease in cash and cash equivalents of $3.597 billion, primarily due to increased investing activities, including capital expenditures and acquisitions. The company continues to return capital to shareholders through dividends and share repurchases.
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