01—Abstract
Summary
Summary of the 10-Q filed April 26, 2019. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation reported flat revenue of $16.1 billiona for the first quarter of 2019, matching the prior year's performance.
This stability was driven by a 4%b 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 billionc in cash flow from operations and returned $3.9 billion to stockholders through dividends and share buybacks, demonstrating a continued commitment to shareholder returns.
02—Key points
Key Highlights
- Total revenue remained flat at $16.1 billion year-over-year.
- PC-centric business revenue increased by 4%, driven by higher average selling prices (ASPs) from a richer product mix.
- Data-centric businesses saw a 5% revenue decrease, influenced by a slowing data center market and pressure on NAND pricing.
- Gross margin declined due to the 10nm process node ramp and memory pricing pressures, partially offset by operating expense leverage.
- Generated $5.0 billion in cash flow from operations.
- Returned $3.9 billion to stockholders via $1.4 billion in dividends and $2.5 billion in stock repurchases.
- Exiting the 5G smartphone modem business while continuing to invest in 5G network infrastructure.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2019, Intel Corp kept $0.25.
- Revenue$16.06B100.0%
- Cost of revenue−$6.97B43.4%
- Gross profit$9.09B56.6%
- Operating costs−$4.92B30.6%
- Operating income$4.17B26.0%
- Interest, other & tax−$200.0M1.2%
- Net income$3.97B24.7%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2019filed April 26, 2019Financial Statements
Q1 FY2019 against Q1 FY2018
| Line item | Q1 FY2019Q1 FY2018 | Change |
|---|---|---|
| Revenue | $16.06B$16.07B | 0.0% |
| Cost of Revenue | $6.97B$6.33B | +10.1% |
| Gross Profit | $9.09B$9.73B | −6.6% |
| R&D Expenses | $3.33B$3.31B | +0.6% |
| SG&A Expenses | $1.58B$1.90B | −16.7% |
| Operating Expenses | $4.92B$5.26B | −6.6% |
| Operating Income | $4.17B$4.47B | −6.6% |
| Interest Expense | $138.00M$112.00M | +23.2% |
| Net Income | $3.97B$4.45B | −10.8% |
| EPS (Basic) | $0.88$0.95 | −7.4% |
| EPS (Diluted) | $0.87$0.93 | −6.5% |
| Shares Outstanding (Basic) | 4.49B4.67B | −3.9% |
| Shares Outstanding (Diluted) | 4.56B4.79B | −4.7% |
05—Questions
Frequently Asked Questions
What were the main drivers of Intel's revenue performance in Q1 2019?
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.
Why did Intel's gross margin decrease in the first quarter?
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.
How did Intel manage its capital and return value to shareholders?
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.
What is Intel's strategy regarding the 5G modem business?
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.
06—Continue