Exhibit 99.1
Intel First-Quarter Revenue $8.9 Billion
Operating Income $1.7 Billion, EPS 27 Cents
SANTA CLARA, Calif.--(BUSINESS WIRE)--April 17, 2007--Intel Corporation
today announced first-quarter revenue of $8.9 billion, operating income of $1.7
billion, net income of $1.6 billion and earnings per share (EPS) of 27 cents.
The results included the effect of a $300-million reversal of previously accrued
taxes that increased EPS by approximately 5 cents.
"The strong momentum of our industry-leading Intel(R) Core(TM)
microarchitecture product family, combined with ongoing structural cost
improvements, delivered solid financial results in the first quarter," said
Intel President and CEO Paul Otellini. "Our product strength is reflected in the
fact that average selling prices for the quarter held up well in a very
competitive environment."
Q1 2007 vs. Q1 2006 vs. Q4 2006
- ------------------ ----------------- ---------------- ----------------
Revenue $8.9 billion -1% -9%
- ------------------ ----------------- ---------------- ----------------
Operating Income $1.7 billion -3% +13%
- ------------------ ----------------- ---------------- ----------------
Net Income $1.6 billion +19% +7%
- ------------------ ----------------- ---------------- ----------------
EPS 27 cents +17% +4%
- ------------------ ----------------- ---------------- ----------------
Results for the first quarter of 2007 included a tax item that
increased EPS by approximately 5 cents. Results for the fourth
quarter of 2006 included the effects of a gain as well as
restructuring and asset impairment charges that together increased
EPS by approximately 1 cent.
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Financial and Key Product Trends
-- First-quarter gross margin was 50.1 percent, higher than 49.6 percent
in the previous quarter as lower microprocessor unit costs and the
sale of previously reserved inventory more than offset the effects of
higher 45 nanometer (nm) start-up costs and lower revenue.
-- The company reached its goal of reducing the workforce to
approximately 92,000 people, meeting the target one quarter ahead of
schedule.
-- Total microprocessor units were lower sequentially. The ASP was
slightly lower driven by a lower mix within server processors, with
desktop and mobile ASPs approximately flat.
-- Chipset, motherboard and flash memory units were lower sequentially.
Business Outlook
The following expectations do not include the potential impact of any
mergers, acquisitions, divestitures or other business combinations that may be
completed after April 16.
Q2 2007 Outlook
-- Revenue: Expected to be between $8.2 billion and $8.8 billion.
-- Gross margin: 48 percent plus or minus a couple of points.
-- Spending (R&D plus MG&A): Between $2.6 billion and $2.7 billion. In
addition, the company expects a second-quarter restructuring charge of
approximately $60 million.
-- Net gains from equity investments and interest and other:
Approximately $150 million.
-- Tax rate: Approximately 31 percent.
-- Depreciation: Between $1.1 billion and $1.2 billion.
2007 Outlook
-- Gross margin: 51 percent plus or minus a few points, higher than the
previous expectation of 50 percent plus or minus a few points.
-- R&D: Approximately $5.6 billion, higher than the previous expectation
of approximately $5.4 billion.
-- MG&A: Approximately $5.1 billion, lower than the previous expectation
of approximately $5.3 billion.
-- Capital spending: $5.5 billion plus or minus $200 million, unchanged.
-- Tax rate: Approximately 31 percent in the third and fourth quarters.
The previous expectation was approximately 30 percent for the year.
-- Depreciation: $4.8 billion plus or minus $100 million, unchanged.
The above statements and any others in this document that refer to plans
and expectations for the second quarter, the year and the future are
forward-looking statements that involve a number of risks and uncertainties.
Many factors could affect Intel's actual results, and variances from Intel's
current expectations regarding such factors could cause actual results to differ
materially from those expressed in these forward-looking statements. Intel
presently considers the factors set forth below in the section entitled "Risk
Factors" to be the important factors that could cause actual results to differ
materially from the Corporation's published expectations.
Recent Events
-- Intel announced that its upcoming 45nm transistor technology is based
on breakthrough Hi-K metal gate transistor materials that increase
performance and reduce leakage, enabling faster and more
energy-efficient microprocessors. The company announced that fifteen
45nm microprocessors are in development and demonstrated
pre-production desktop, mobile and server platforms running five
operating systems, with shipments scheduled to begin in the second
half of 2007.
-- Intel announced that Fab 11X in Rio Rancho, New Mexico will be
re-tooled to become the company's fourth 300mm factory capable of
producing 45nm microprocessors. Intel also announced plans to build a
300mm factory in China, with production to begin in 2010.
-- Intel expanded its quad-core microprocessor line-up to include its
first 50-watt quad-core server processors, first quad-core processors
for embedded designs, and fastest-ever quad-core processors for
extreme gaming and digital design. The company has now introduced 12
quad-core processors for use in computing, storage and embedded
applications.
-- Intel and Sun Microsystems announced a broad strategic alliance that
will result in Sun delivering a comprehensive family of enterprise and
telecommunications servers and workstations based on Intel(R) Xeon(R)
processors, with Intel supporting Solaris(1) as a mainstream operating
system.
-- The company's Intel(R) vPro(TM) processor technology, which brings
manageability and security benefits to IT managers, has been deployed
by more than 200 companies and institutions including 3M, BMW,
FujiFilm, ING, Johns Hopkins, Pioneer and Verizon.
-- The company introduced the Intel(R) Centrino(R) Pro processor
technology brand, with plans to bring more of the security and
manageability capabilities of Intel's business desktop platforms to
notebook PCs.
-- The company introduced Wi-Fi connections based on the new 802.11n
specification that will give future users of Intel(R) Centrino(R)
processor technology up to five times the Wi-Fi performance and twice
the range of earlier technologies.
-- The company announced shipments of Intel-powered "classmate PCs,"
bringing affordable mobile computing to K-12 students in Brazil and
Mexico, with plans for pilot programs in 25 countries.
-- Intel announced "solid-state drive" products that use Intel NAND flash
chips as an alternative to rotating magnetic disk drive technology.
-- Intel researchers developed an 80-core "tera-scale" processor that
brings supercomputer-like performance to a single chip. The
experimental processor may lead to future Intel products bringing
trillions of calculations per second to PCs and servers.
Risk Factors
-- Intel operates in intensely competitive industries that are
characterized by a high percentage of costs that are fixed or
difficult to reduce in the short term, significant pricing pressures,
and product demand that is highly variable and difficult to forecast.
Revenue and the gross margin percentage are affected by the timing of
new Intel product introductions and the demand for and market
acceptance of Intel's products; actions taken by Intel's competitors,
including product offerings, marketing programs and pricing pressures
and Intel's response to such actions; Intel's ability to respond
quickly to technological developments and to incorporate new features
into its products; and the availability of sufficient components from
suppliers to meet demand. Factors that could cause demand to be
different from Intel's expectations include customer acceptance of
Intel and competitors' products; changes in customer order patterns,
including order cancellations; changes in the level of inventory at
customers; and changes in business and economic conditions.
-- The gross margin percentage could vary significantly from expectations
based on changes in revenue levels; product mix and pricing; capacity
utilization; variations in inventory valuation; excess or obsolete
inventory; manufacturing yields; changes in unit costs; impairments of
long-lived assets, including manufacturing, assembly/test and
intangible assets; and the timing and execution of the manufacturing
ramp and associated costs, including start-up costs.
-- Expenses, particularly certain marketing and compensation expenses,
vary depending on the level of demand for Intel's products, the level
of revenue and profits and impairments of long-lived assets.
-- Intel is in the midst of a structure and efficiency program that is
resulting in several actions that could have an impact on expected
expense levels and gross margin.
-- The tax rate expectation is based on current tax law and current
expected income. The tax rate may be affected by the closing of
acquisitions or divestitures; the jurisdictions in which profits are
determined to be earned and taxed; changes in the estimates of
credits, benefits and deductions; the resolution of issues arising
from tax audits with various tax authorities, including payment of
interest and penalties; and the ability to realize deferred tax
assets.
-- Gains or losses from equity securities and interest and other could
vary from expectations depending on equity market levels and
volatility; gains or losses realized on the sale or exchange of
securities; gains or losses from equity method investments; impairment
charges related to marketable, non-marketable and other investments;
interest rates; cash balances; and changes in fair value of derivative
instruments.
-- Intel's results could be affected by the amount, type, and valuation
of share-based awards granted as well as the amount of awards
cancelled due to employee turnover and the timing of award exercises
by employees.
-- Intel's results could be impacted by unexpected economic, social,
political and physical/infrastructure conditions in the countries in
which Intel, its customers or its suppliers operate, including
military conflict and other security risks, natural disasters,
infrastructure disruptions, health concerns and fluctuations in
currency exchange rates.
-- Intel's results could be affected by adverse effects associated with
product defects and errata (deviations from published specifications),
and by litigation or regulatory matters involving intellectual
property, stockholder, consumer, antitrust and other issues, such as
the litigation and regulatory matters described in Intel's SEC
reports.
A detailed discussion of these and other factors that could affect Intel's
results is included in Intel's SEC filings, including the report on Form 10-K
for the year ended Dec. 30, 2006.
Status of Business Outlook
During the quarter, Intel's corporate representatives may reiterate the
Business Outlook during private meetings with investors, investment analysts,
the media and others. From the close of business on June 1 until publication of
the company's second-quarter 2007 earnings release, Intel will observe a "Quiet
Period" during which the Business Outlook disclosed in the company's press
releases and filings with the SEC should be considered to be historical,
speaking as of prior to the Quiet Period only and not subject to update by the
company.
Earnings Webcast
Intel will hold a public webcast at 2:30 p.m. PDT today on its Investor
Relations Web site at www.intc.com, with a replay available until May 1.
Intel, the world leader in silicon innovation, develops technologies,
products and initiatives to continually advance how people work and live.
Additional information about Intel is available at www.intel.com/pressroom.
Intel, the Intel logo, Intel Core, Intel Xeon, Intel vPro, Intel Centrino
Pro and Intel Centrino are trademarks or registered trademarks of Intel
Corporation or its subsidiaries in the United States and other countries.
(1) Other names and brands may be claimed as the property of others.
INTEL CORPORATION
CONSOLIDATED SUMMARY INCOME STATEMENT DATA
(In millions, except per share amounts)
Three Months Ended
--------------------------
Mar. 31, Apr. 1,
2007 2006
------------- ------------
NET REVENUE $ 8,852 $ 8,940
Cost of sales 4,420 3,997
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GROSS MARGIN 4,432 4,943
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Research and development 1,400 1,562
Marketing, general and administrative 1,277 1,644
Restructuring and asset impairment charges 75 --
Amortization of acquisition-related
intangibles and costs 5 19
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OPERATING EXPENSES 2,757 3,225
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OPERATING INCOME 1,675 1,718
Gains on equity securities, net 29 2
Interest and other, net 169 154
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INCOME BEFORE TAXES 1,873 1,874
Income taxes 263 517
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NET INCOME $ 1,610 $ 1,357
============= ============
BASIC EARNINGS PER SHARE $ 0.28 $ 0.23
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DILUTED EARNINGS PER SHARE $ 0.27 $ 0.23
============= ============
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 5,777 5,854
DILUTED 5,874 5,954
INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions)
Mar. 31, Dec. 30,
2007 2006
------------- ------------
CURRENT ASSETS
Cash and short-term investments $ 7,689 $ 8,868
Trading assets 1,335 1,134
Accounts receivable 2,780 2,709
Inventories:
Raw materials 670 608
Work in process 2,187 2,044
Finished goods 1,509 1,662
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4,366 4,314
Income taxes receivable 259 -
Deferred taxes and other current assets 1,366 1,255
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TOTAL CURRENT ASSETS 17,795 18,280
Property, plant and equipment, net 17,617 17,602
Marketable strategic equity securities 359 398
Other long-term investments 4,496 4,023
Goodwill 3,861 3,861
Other long-term assets 4,729 4,204
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TOTAL ASSETS $ 48,857 $ 48,368
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CURRENT LIABILITIES
Short-term debt $ 139 $ 180
Accounts payable and accrued liabilities 5,876 5,938
Deferred income on shipments to distributors 611 599
Income taxes payable - 1,797
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TOTAL CURRENT LIABILITIES 6,626 8,514
Long-term taxes payable 1,447 -
Deferred tax liabilities 234 265
Long-term debt 1,848 1,848
Other long-term liabilities 1,202 989
Stockholders' equity 37,500 36,752
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TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 48,857 $ 48,368
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INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
(In millions)
Q1 2007 Q4 2006 Q1 2006
-------- -------- --------
GEOGRAPHIC REVENUE:
Asia-Pacific $4,432 $4,855 $4,293
50% 50% 48%
Americas $1,727 $2,003 $1,905
20% 21% 21%
Europe $1,722 $1,900 $1,701
19% 19% 19%
Japan $971 $936 $1,041
11% 10% 12%
CASH INVESTMENTS:
Cash and short-term investments $7,689 $8,868 $7,854
Trading assets - fixed income (1) 877 684 887
--------------------------
Total cash investments $8,566 $9,552 $8,741
TRADING ASSETS:
Trading assets - equity securities
offsetting deferred compensation (2) $458 $450 $378
Total trading assets - sum of 1+2 $1,335 $1,134 $1,265
TOTAL STRATEGIC EQUITY INVESTMENTS $3,599 $3,192 $2,422
SELECTED CASH FLOW INFORMATION:
Depreciation $1,187 $1,166 $1,139
Share-based compensation $284 $334 $374
Amortization of intangibles and other
acquisition-related costs $64 $61 $75
Capital spending ($1,361) ($1,116) ($1,758)
Stock repurchase program ($400) ($150) ($2,943)
Proceeds from sales of shares to employees,
tax benefit & other $604 $288 $437
Dividends paid ($650) ($576) ($585)
Net cash received(used) for
divestitures/acquisitions $0 $600 $0
SHARE-BASED COMPENSATION CHARGES:
Cost of sales $78 $94 $86
Research and development $114 $119 $135
Marketing, general and administrative $92 $121 $153
EARNINGS PER SHARE INFORMATION:
Weighted average common shares outstanding -
basic 5,777 5,764 5,854
Dilutive effect of employee equity incentive
plans 46 52 49
Dilutive effect of convertible debt 51 51 51
--------------------------
Weighted average common shares outstanding -
diluted 5,874 5,867 5,954
STOCK BUYBACK:
Shares repurchased 19 7 138
Cumulative shares repurchased 2,850 2,831 2,743
Remaining dollars authorized for buyback (in
billions) $16.9 $17.3 $18.9
OTHER INFORMATION:
Employees (in thousands) 91.8 94.1 103.3
INTEL CORPORATION
SUPPLEMENTAL OPERATING RESULTS AND OTHER INFORMATION
($ in millions)
OPERATING SEGMENT Q1 Q4 Q3 Q2 Q1
INFORMATION: 2007 2006 2006 2006 2006 2006
- ----------------------------------------------------------------------
Digital Enterprise Group
Microprocessor revenue 3,561 3,855 3,521 3,338 3,892 14,606
Chipset, motherboard and
other revenue 1,193 1,307 1,425 1,283 1,255 5,270
Net revenue 4,754 5,162 4,946 4,621 5,147 19,876
Operating income 931 928 655 751 1,175 3,509
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Mobility Group
Microprocessor revenue 2,441 2,668 2,239 1,958 2,347 9,212
Chipset and other
revenue 866 925 809 731 632 3,097
Net revenue 3,307 3,593 3,048 2,689 2,979 12,309
Operating income 1,381 1,538 1,156 851 1,050 4,595
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Flash Memory Group
Net revenue 469 576 507 536 544 2,163
Operating loss (283) (205) (139) (169) (125) (638)
- ----------------------------------------------------------------------
All Other
Net revenue 322 363 238 163 270 1,034
Operating loss (354) (773) (298) (361) (382) (1,814)
- ----------------------------------------------------------------------
Total
Net revenue 8,852 9,694 8,739 8,009 8,940 35,382
Operating income 1,675 1,488 1,374 1,072 1,718 5,652
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The company's operating segments include the Digital Enterprise Group,
Mobility Group, Flash Memory Group, Digital Home Group, and Digital
Health Group. Beginning in the first quarter of 2007, the Channel
Platforms Group will directly support Intel's operating segments.
Prior-period amounts have been adjusted retrospectively to reflect
certain reorganizations.
The company has sales and marketing, manufacturing, finance, and
administration groups. Expenses for these groups are generally
allocated to the operating segments and the expenses are included in
the operating results reported above. Additionally, in the first
quarter of 2007, the company began allocating share-based
compensation to the operating segments and adjusted results
retrospectively to reflect this change. Revenue for the "all other"
category primarily relates to microprocessors and related chipsets
sold by the Digital Home Group. In addition to the operating results
for the Digital Home Group and Digital Health Group operating
segments, the "all other" category includes certain corporate-level
operating expenses. These expenses include:
-- a portion of profit-dependent bonus and other expenses not
allocated to the operating segments;
-- results of operations of seed businesses that support the
company's initiatives;
-- acquisition-related costs, including amortization and any
impairment of acquisition-related intangibles and goodwill;
-- charges for purchased in-process research and development; and
-- amounts included within restructuring and asset impairment
charges in the consolidated condensed statements of income.