Key Financial Information
Record microprocessor and chipset units.
Mobility Group revenue up 19 percent, Digital Enterprise Group revenue
up 14 percent, and Intel Atom microprocessor and chipset revenue up 15
percent to $415 million, all sequentially.
Gross margin was 57.6 percent, higher than the company’s expectation.
The average selling price (ASP) for microprocessors was slightly down
Inventories were down $315 million sequentially.
Spending (R&D plus MG&A) was $2.75 billion, consistent with the
Restructuring and asset impairment charges were $63 million, higher
than the company’s expectation.
The net loss from equity investments and interest and other was $47
million, better than the company’s expectation.
The effective tax rate was 27 percent, versus the company’s
expectation of 23 percent.
Intel’s Business Outlook does not include the potential impact of any
mergers, acquisitions, divestitures or other business combinations that
may be completed after Oct. 12.
Revenue: $10.1 billion, plus or minus $400 million.
Gross margin percentage: 62 percent, plus or minus 3 percentage points.
Spending (R&D plus MG&A): Approximately $2.9 billion.
Restructuring and asset impairment charges: Approximately $40 million.
Amortization of acquisition-related intangibles and costs:
Approximately $20 million.
Impact of equity investments and interest and other: Approximately
Tax rate: Approximately 26 percent.
Depreciation: Approximately $1.2 billion.
Full Year Capital spending: Expected to be $4.5 billion plus or minus
$100 million, down from the prior expectation of $4.7 billion plus or
minus $200 million.
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 Nov. 25
until publication of the company’s fourth-quarter earnings release,
Intel will observe a “Quiet Period” during which the Business Outlook
disclosed in the company’s news releases and filings with the SEC should
be considered as historical, speaking as of prior to the Quiet Period
only and not subject to an update by the company.
The above statements and any others in this document that refer to plans
and expectations for the fourth 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 following to
be the important factors that could cause actual results to differ
materially from the corporation’s expectations.
Demand could be different from Intel's expectations due to factors
including changes in business and economic conditions; customer
acceptance of Intel’s and competitors’ products; changes in customer
order patterns including order cancellations; and changes in the level
of inventory at customers.
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 and product demand that is
highly variable and difficult to forecast. Additionally, Intel is in
the process of transitioning to its next generation of products on
32nm process technology, and there could be execution issues
associated with these changes, including product defects and errata
along with lower than anticipated manufacturing yields. 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 and introductions, marketing programs and pricing
pressures and Intel’s response to such actions; and Intel’s ability to
respond quickly to technological developments and to incorporate new
features into its products.
The gross margin percentage could vary significantly from expectations
based on changes in revenue levels; capacity utilization; start-up
costs, including costs associated with the new 32nm process
technology; variations in inventory valuation, including variations
related to the timing of qualifying products for sale; excess or
obsolete inventory; product mix and pricing; 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.
Expenses, particularly certain marketing and compensation expenses, as
well as restructuring and asset impairment charges, vary depending on
the level of demand for Intel's products and the level of revenue and
The tax rate expectation is based on current tax law and current
expected income. The tax rate may be affected by 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
Gains or losses from equity securities and interest and other could
vary from expectations depending on gains or losses realized on the
sale or exchange of securities; gains or losses from equity method
investments; impairment charges related to debt securities as well as
equity and other investments; interest rates; cash balances; and
changes in fair value of derivative instruments.
The majority of our non-marketable equity investment portfolio balance
is concentrated in companies in the flash memory market segment, and
declines in this market segment or changes in management’s plans with
respect to our investments in this market segment could result in
significant impairment charges, impacting restructuring charges as
well as gains/losses on equity investments and interest and other.
Intel's results could be impacted by adverse economic, social,
political and physical/infrastructure conditions in countries where
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
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.