01—Abstract
Summary
Summary of the 10-Q filed October 25, 2019. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation's Q3 2019 earnings report shows flat revenue of $19.2 billiona, mirroring the previous year's performance.
This stability was achieved through a divergence in segment performance: the data-centric businesses grew by 6%, driven by strong performance in the Data Center Group (DCG) and other data-focused units like Non-Volatile Memory Solutions Group (NSG), Internet of Things Group (IOTG), and Mobileye. Conversely, the PC-centric business experienced a 5% decline, primarily due to lower platform unit volumes, though this was partially offset by a stronger mix of higher-performance products. Despite flat top-line revenue, gross margins saw a decline of $1.1 billionb year-over-year, impacted by lower platform unit sales and margin compression in memory products.
However, operating income remained relatively stable, with GAAP diluted EPS at $1.35 compared to $1.38c in the prior year's quarter. The company continued its commitment to shareholder returns, generating $23.3 billion in operating cash flow for the first nine months and returning $14.3 billion to stockholders through dividends and substantial share buybacks. Intel also announced the planned divestiture of its smartphone modem business to further focus on 5G infrastructure and edge computing opportunities.
02—Key points
Key Highlights
- Total revenue for Q3 2019 was $19.2 billion, flat compared to Q3 2018.
- Data-centric businesses grew 6% year-over-year, while the PC-centric business declined by 5%.
- Gross margin decreased by $1.1 billion year-over-year, impacted by lower platform unit sales and memory product margin compression.
- GAAP diluted Earnings Per Share (EPS) was $1.35, a slight decrease from $1.38 in Q3 2018.
- The company generated $23.3 billion in cash flow from operations for the first nine months of 2019.
- Intel returned $14.3 billion to stockholders in the first nine months, including $4.2 billion in dividends and $10.1 billion in share buybacks.
- Intel signed an agreement to divest the majority of its smartphone modem business, expected to close in Q4 2019.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2019, Intel Corp kept $0.31.
- Revenue$19.19B100.0%
- Cost of revenue−$7.89B41.1%
- Gross profit$11.29B58.9%
- Operating costs−$4.85B25.3%
- Operating income$6.45B33.6%
- Interest, other & tax−$457.0M2.4%
- Net income$5.99B31.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2019filed October 25, 2019Financial Statements
Q3 FY2019 against Q3 FY2018
| Line item | Q3 FY2019Q3 FY2018 | Change |
|---|---|---|
| Revenue | $19.19B$19.16B | +0.1% |
| Cost of Revenue | $7.89B$6.80B | +16.1% |
| Gross Profit | $11.29B$12.36B | −8.6% |
| R&D Expenses | $3.21B$3.43B | −6.4% |
| SG&A Expenses | $1.54B$1.60B | −4.3% |
| Operating Expenses | $4.85B$5.01B | −3.3% |
| Operating Income | $6.45B$7.35B | −12.3% |
| Interest Expense | $107.00M$109.00M | −1.8% |
| Net Income | $5.99B$6.40B | −6.4% |
| EPS (Basic) | $1.36$1.40 | −2.9% |
| EPS (Diluted) | $1.35$1.38 | −2.2% |
| Shares Outstanding (Basic) | 4.39B4.57B | −4.0% |
| Shares Outstanding (Diluted) | 4.43B4.65B | −4.6% |
05—Questions
Frequently Asked Questions
How did Intel's revenue perform in Q3 2019 compared to Q3 2018?
Intel's total revenue for Q3 2019 was $19.2 billion, which was flat compared to Q3 2018. This overall stability was a result of a 6% growth in data-centric businesses being offset by a 5% decline in the PC-centric business.
What is driving the growth in Intel's data-centric businesses?
The growth in data-centric businesses was driven by strong performance across various segments, including a high mix of Intel Xeon processors in the Data Center Group (DCG), and growth in Non-Volatile Memory Solutions Group (NSG), Internet of Things Group (IOTG), and Mobileye. The enterprise and government segments within DCG returned to growth.
What factors contributed to the decline in gross margin?
The decrease in gross margin was primarily due to lower platform unit sales and margin compression on memory products. Additionally, lower NAND market pricing and the absence of government grants recognized in the prior year impacted margins.
What is the significance of the divestiture of the smartphone modem business?
Intel signed an agreement to divest the majority of its smartphone modem business to focus more on the broader opportunity in modernizing network and edge infrastructure with its 5G efforts. This strategic move is expected to close in the fourth quarter of 2019.
How did Intel manage its cash flow and shareholder returns during the period?
Intel generated a substantial $23.3 billion in cash flow from operations during the first nine months of 2019. The company demonstrated a strong commitment to returning capital to shareholders, distributing $14.3 billion, which included $4.2 billion in dividends and $10.1 billion through share repurchases.
06—Continue