10-QPeriod: Q1 FY2019

INTEL CORP Quarterly Report for Q1 Ended Mar 30, 2019

Filed April 26, 2019For Securities:INTC

Summary

Intel Corporation reported flat revenue of $16.1 billion for the first quarter of 2019, matching the prior year's performance. This stability was driven by a 4% increase in the PC-centric business, largely due to higher average selling prices on premium products, which offset a 5% decline in data-centric businesses. The decrease in data-centric revenue was attributed to a slowdown in the data center market and persistent pricing pressure on NAND memory. Despite flat revenue, gross margins and operating income declined due to the ongoing ramp of the 10nm process technology and lower memory product pricing. However, the company managed operating expenses effectively, partially offsetting the gross margin compression. Intel generated $5.0 billion in cash flow from operations and returned $3.9 billion to stockholders through dividends and share buybacks, demonstrating a continued commitment to shareholder returns.

Financial Highlights

52 data points
Beta

Revenue

$16.06B

56.6% Gross Margin

Net Income

$3.97B

24.7% Net Margin

EPS (Diluted)

$0.87

Total Assets

$129.46B

Cash & Equivalents

$3.15B

Free Cash Flow

$1.64B

Financial Statements
Beta
Revenue$16.06B
Cost of Revenue$6.97B
Gross Profit$9.09B
R&D Expenses$3.33B
SG&A Expenses$1.58B
Operating Expenses$4.92B
Operating Income$4.17B
Interest Expense$138.00M
Net Income$3.97B
EPS (Basic)$0.88
EPS (Diluted)$0.87
Shares Outstanding (Basic)4.49B
Shares Outstanding (Diluted)4.56B

Key Highlights

  • 1Total revenue remained flat at $16.1 billion year-over-year.
  • 2PC-centric business revenue increased by 4%, driven by higher average selling prices (ASPs) from a richer product mix.
  • 3Data-centric businesses saw a 5% revenue decrease, influenced by a slowing data center market and pressure on NAND pricing.
  • 4Gross margin declined due to the 10nm process node ramp and memory pricing pressures, partially offset by operating expense leverage.
  • 5Generated $5.0 billion in cash flow from operations.
  • 6Returned $3.9 billion to stockholders via $1.4 billion in dividends and $2.5 billion in stock repurchases.
  • 7Exiting the 5G smartphone modem business while continuing to invest in 5G network infrastructure.

Frequently Asked Questions

Intel's revenue was flat year-over-year at $16.1 billion. The PC-centric business grew by 4%, driven by higher average selling prices from premium products. This growth offset a 5% decline in data-centric businesses, which were impacted by a slowdown in the data center market and pricing pressures in NAND memory.

Gross margin declined primarily due to the ongoing ramp-up of the 10-nanometer (nm) process technology, which involves higher initial costs, and continued pricing pressure on memory products (NAND). These factors were partially offset by improved operating expense management.

Intel generated a strong $5.0 billion in cash flow from operations during the quarter. The company returned $3.9 billion to shareholders, comprising $1.4 billion in dividends and $2.5 billion through share repurchases, underscoring a commitment to capital return.

Intel announced it will be exiting the 5G smartphone modem business but will continue to fulfill existing customer commitments for 4G modem products. The company will maintain its strategic focus on 5G and continue investing in its 5G network infrastructure business. Intel is also exploring opportunities for 4G and 5G modems in PCs and other data-centric devices.