Intel Second-Quarter Revenue $8.7 Billion

SANTA CLARA, Calif.—(BUSINESS WIRE)—July 17, 2007— Intel Corporation today announced second-quarter revenue of $8.7 billion, operating income of $1.35 billion, net income of $1.3 billion and earnings per share (EPS) of 22 cents. The results include tax items that increased EPS by approximately 3 cents along with restructuring charges of $82 million.

"Intel's operational execution continued to strengthen, resulting in an outstanding product roadmap and solid year-over-year revenue growth," said Intel President and CEO Paul Otellini. "We're pleased that our efforts to streamline the company are delivering profit growth in excess of revenue growth."
                      Q2 2007          vs. Q2 2006      vs. Q1 2007
--------------------- ---------------- ---------------- --------------
Revenue               $8.7 billion     +8%              -2%
--------------------- ---------------- ---------------- --------------
Operating Income      $1.35 billion    +26%             -19%
--------------------- ---------------- ---------------- --------------
Net Income            $1.3 billion     +44%             -22%
--------------------- ---------------- ---------------- --------------
EPS                   22 cents         +47%             -21%
--------------------- ---------------- ---------------- --------------
Results for the first quarter of 2007 included a tax item that
 increased EPS by approximately 6 cents as well as restructuring
 charges of $75 million. Results for the second quarter of 2007
 included tax items that increased EPS by approximately 3 cents along
 with restructuring charges of $82 million.

Financial and Key Product Trends

-- Second-quarter gross margin was 46.9 percent, lower than the midpoint of the previous expectation. Microprocessor margins were as expected with higher unit shipments offset by lower average selling prices (ASPs). Demand for NOR flash products was lower than expected, resulting in impacts that lowered Intel's gross margin by one point.

-- Total microprocessor units were higher sequentially; the ASP was lower.

-- Chipset units set a record during the quarter.

-- Flash memory units were higher sequentially while motherboard units were lower.

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 July 16.

Q3 2007 Outlook

-- Revenue: Between $9.0 billion and $9.6 billion.

-- Gross margin: 52 percent plus or minus a couple of points.

-- Spending (R&D plus MG&A): Between $2.7 billion and $2.8 billion.

-- Restructuring and asset impairment charges: Approximately $150 million.

-- Net gains from equity investments and interest and other: Approximately $320 million.

-- Tax rate: Approximately 29 percent, lower than the previous expectation of approximately 31 percent.

-- Depreciation: Approximately $1.1 billion.

2007 Outlook

-- Gross margin: 51 percent plus or minus a few points, unchanged.

-- R&D: Approximately $5.7 billion, higher than the previous expectation of approximately $5.6 billion.

-- MG&A: Approximately $5.1 billion, unchanged.

-- Capital spending: $4.9 billion plus or minus $200 million, lower than the previous expectation of $5.5 billion plus or minus $200 million, primarily due to manufacturing efficiencies.

-- Tax rate: Approximately 29 percent in the fourth quarter, lower than the previous expectation of approximately 31 percent.

-- Depreciation: $4.6 billion plus or minus $100 million, lower than the previous expectation of $4.8 billion plus or minus $100 million due to suspended depreciation for NOR flash manufacturing assets that are being held for sale.

The above statements and any others in this document that refer to plans and expectations for the third 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 titled "Risk Factors" to be the important factors that could cause actual results to differ materially from the corporation's published expectations.

Recent Events

-- Intel, STMicroelectronics and Francisco Partners announced an agreement to form a new independent company by combining Intel's NOR flash memory business and STMicroelectronics' NOR and NAND flash businesses. The new company is expected to be a market segment leader in non-volatile memory solutions, serving customers in wireless communications and other segments. The transaction is expected to close by the fourth quarter of 2007 upon satisfaction of regulatory reviews and closing conditions.

-- Intel introduced a new generation of Intel(R) Centrino(R) processor technology (formerly codenamed Santa Rosa) that delivers faster Intel(R) Core(TM) 2 Duo processors, high-bandwidth 802.11n WiFi connectivity, richer graphics processing and optional Intel(R) Turbo Memory. Notebook PC makers are launching more than 230 new designs for consumers and business users.

-- The company launched the first-ever Intel(R) Core(TM) 2 Extreme processors for mobile, enabling notebook PCs for the most demanding gamers, digital artists and media enthusiasts.

-- Intel introduced the Intel(R) 3 Series chipset family which brings new capabilities to today's systems and provides manufacturers with a socket-compatible migration path to Intel's upcoming "Penryn" family of processors based on the industry's first 45nm logic process technology.

-- The company announced it has shipped over 1 million quad-core microprocessors for servers and enthusiast desktop systems, expanding its quad-core line-up to 14 different processors.

-- Intel and the One Laptop Per Child association announced plans to collaborate on education-related technology targeting the more than 1 billion K-12 students worldwide who will benefit from access to PCs and the Internet.

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