01—Abstract
Summary
Summary of the 10-Q filed October 23, 2020. Cited figures are marked; the original filing is the authoritative source.
Intel Corporation's third quarter 2020 report indicates a sequential revenue decline of 4% year-over-year, totaling $18.3 billiona.
This was primarily driven by a 10% decrease in the data-centric businesses, impacted by COVID-19 and a mix shift towards cloud service providers, partially offset by a 1% growth in the PC-centric business, which benefited from strong notebook demand. Despite the revenue dip, the company announced a significant strategic move: the divestiture of its NAND memory business to SK hynix for $9.0 billionb. This move aims to refocus resources on long-term growth priorities.
Intel also launched its 11th Gen Intel Core processors with Intel Iris Xe graphics, signaling continued innovation in its core PC product line. The company returned significant capital to stockholders, highlighting its commitment to shareholder value.
02—Key points
Key Highlights
- Total revenue for the quarter was $18.3 billion, a 4% decrease year-over-year.
- Data-centric businesses saw a 10% decline, impacted by COVID-19 and market mix shifts, while the PC-centric business grew by 1%.
- Intel announced the divestiture of its NAND memory business to SK hynix for $9.0 billion, expected to close in two stages.
- Launched 11th Gen Intel Core processors for laptops with Intel Iris Xe graphics, featuring the new 10nm SuperFin process technology.
- Generated $25.5 billion in cash flow from operations for the first nine months and returned $18.4 billion to stockholders.
- Operating income decreased by 22% year-over-year to $5.1 billion.
- The company has initiated Accelerated Share Repurchase (ASR) agreements totaling $10.0 billion.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2020, Intel Corp kept $0.23.
- Revenue$18.33B100.0%
- Cost of revenue−$8.59B46.9%
- Gross profit$9.74B53.1%
- Operating costs−$4.68B25.5%
- Operating income$5.06B27.6%
- Interest, other & tax−$783.0M4.3%
- Net income$4.28B23.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2020filed October 23, 2020Financial Statements
Q3 FY2020 against Q3 FY2019
| Line item | Q3 FY2020Q3 FY2019 | Change |
|---|---|---|
| Revenue | $18.33B$19.19B | −4.5% |
| Cost of Revenue | $8.59B$7.89B | +8.8% |
| Gross Profit | $9.74B$11.29B | −13.8% |
| R&D Expenses | $3.27B$3.21B | +2.0% |
| SG&A Expenses | $1.44B$1.54B | −6.6% |
| Operating Expenses | $4.68B$4.85B | −3.4% |
| Operating Income | $5.06B$6.45B | −21.5% |
| Interest Expense | $160.00M$107.00M | +49.5% |
| Net Income | $4.28B$5.99B | −28.6% |
| EPS (Basic) | $1.02$1.36 | −25.0% |
| EPS (Diluted) | $1.02$1.35 | −24.4% |
| Shares Outstanding (Basic) | 4.19B4.39B | −4.6% |
| Shares Outstanding (Diluted) | 4.21B4.43B | −5.0% |
05—Questions
Frequently Asked Questions
What was the primary driver of the revenue decline in Q3 2020?
The primary driver of the revenue decline was a 10% decrease in the data-centric businesses, which includes segments like the Data Center Group (DCG) and Internet of Things Group (IOTG). This decline was attributed to COVID-related demand impacts and a shift in mix from enterprise and government customers to cloud service providers.
What is the significance of the NAND memory business divestiture?
The divestiture of the NAND memory business to SK hynix for $9.0 billion is a major strategic move. It allows Intel to refocus its resources on its core long-term growth priorities, such as developing advanced processors and technologies, rather than managing a business that may not align as closely with its future strategic direction.
How did the PC-centric business perform?
The PC-centric business showed resilience, growing by 1% year-over-year. This growth was driven by strong demand for notebooks, supported by increased remote work and learning trends, although this was partially offset by lower demand for desktop PCs and a lower average selling price (ASP) for notebooks due to higher demand in consumer and education segments.
What is Intel's approach to returning capital to shareholders?
Intel has a strong commitment to returning capital to shareholders. In the first nine months of 2020, the company returned $18.4 billion, including $4.2 billion in dividends and $14.2 billion in share repurchases. Notably, the company entered into Accelerated Share Repurchase (ASR) agreements totaling $10.0 billion, demonstrating confidence in its stock valuation.
06—Continue