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Intel Posts Record Third-Quarter Revenue of $10.2 Billion -- Net Income Up By 12%

SANTA CLARA, Calif.—(BUSINESS WIRE)—October 14, 2008— Intel Corporation today announced record third-quarter revenue of $10.2 billion along with operating income of $3.1 billion, net income of $2 billion and earnings per share (EPS) of 35 cents.

Intel delivered the best third-quarter revenue in its history, said Paul Otellini, Intel president and CEO. We were solidly profitable, with operating income of over $3 billion, reflecting strong across-the-board execution and best-of-class products.

As we look to Q4, it is hard to know what impact the financial crisis will have on end customer demand. We are confident that our product portfolio, strong cash flow, commitment to deploying new technology and market momentum will allow us to outpace peer companies at a time when business levels are difficult to predict.

  Q3 2008 vs. Q3 2007 vs. Q2 2008
Revenue $10.2 billion +1% +8%
Operating Income $3.1 billion +44% +37%
Net Income $2 billion +12% +26%
EPS 35 cents +17% +25%
Q3 2008 results included an impairment of the Numonyx investment that net of tax benefits resulted in a $162-million charge. Q3 2007 results included $125 million in restructuring and asset impairment charges; the results also included significantly higher revenue from divested businesses such as NOR flash and cellular baseband products. Q2 2008 results included $96 million in restructuring charges.

Key Financial Information

Business Outlook

Intels Business Outlook does not include the potential impact of any mergers, acquisitions, divestitures or other business combinations that may be completed after Oct. 13. Current uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters and makes it more likely that Intels actual results could differ materially from expectations.

Q4 2008:

Full-Year 2008:

Status of Business Outlook

During the quarter, Intels corporate representatives may reiterate the Business Outlook during private meetings with investors, investment analysts, the media and others. Due to the uncertain economic environment, Intel intends to publish a mid-quarter business update this quarter. From the close of business on Nov. 28 until publication of the mid-quarter update on Dec. 4, Intel will observe a Quiet Period during which the Business Outlook disclosed in the companys 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 an update by the company.

Risk Factors

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 Intels actual results, and variances from Intels 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 corporations expectations.

A detailed discussion of these and other factors that could affect Intels results is included in Intels SEC filings, including the report on Form 10-Q for the quarter ended June 28, 2008.

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. A webcast replay and MP3 audio download will also be made available on the site.

Intel [NASDAQ: INTC], 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 and blogs.intel.com

INTC/IR

Intel, the Intel logo and Intel Atom are trademarks of Intel Corporation in the United States and other countries.

* 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 Nine Months Ended
Sept. 27, Sept. 29, Sept. 27, Sept. 29,
2008 2007 2008 2007
NET REVENUE $ 10,217 $ 10,090 $ 29,360 $ 27,622
Cost of sales   4,198   4,919   12,885   13,944
GROSS MARGIN   6,019   5,171   16,475   13,678
 
Research and development 1,471 1,521 4,406 4,274
Marketing, general and administrative 1,416 1,381 4,195 3,953
Restructuring and asset impairment charges   34   125   459   282
OPERATING EXPENSES   2,921   3,027   9,060   8,509
OPERATING INCOME 3,098 2,144 7,415 5,169
Gains (losses) on equity investments, net (396) 148 (564) 176
Interest and other, net   131   211   466   560
INCOME BEFORE TAXES 2,833 2,503 7,317 5,905
Provision for taxes   819   712   2,259   1,200
NET INCOME $ 2,014 $ 1,791 $ 5,058 $ 4,705
 
BASIC EARNINGS PER COMMON SHARE $ 0.36 $ 0.31 $ 0.89 $ 0.81
DILUTED EARNINGS PER COMMON SHARE $ 0.35 $ 0.30 $ 0.87 $ 0.79
 
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 5,603 5,837 5,696 5,808
DILUTED 5,692 5,967 5,790 5,919

INTEL CORPORATION
CONSOLIDATED SUMMARY BALANCE SHEET DATA
(In millions)
       
Sept. 27, Jun. 28, Dec. 29,
2008 2008 2007
CURRENT ASSETS
Cash and cash equivalents $ 3,854 $ 4,079 $ 7,307
Short-term investments 4,433 4,312 5,490
Trading assets 3,917 3,570 2,566
Accounts receivable, net 2,782 2,399 2,576
Inventories:
Raw materials 583 580 507
Work in process 1,427 1,355 1,460
Finished goods   1,388   1,330   1,403
3,398 3,265 3,370
Deferred tax assets 1,430 1,209 1,186
Other current assets   1,609   944   1,390
TOTAL CURRENT ASSETS   21,423   19,778   23,885
 
Property, plant and equipment, net 17,026 16,723 16,918
Marketable equity securities 401 644 987
Other long-term investments 3,820 4,651 4,398
Goodwill 3,924 3,915 3,916
Other long-term assets   6,125   6,681   5,547
TOTAL ASSETS $ 52,719 $ 52,392 $ 55,651
 
CURRENT LIABILITIES
Short-term debt $ 467 $ 175 $ 142
Accounts payable 2,507 2,379 2,361
Accrued compensation and benefits 1,858 1,658 2,417
Accrued advertising 882 787 749
Deferred income on shipments to distributors 656 665 625
Other accrued liabilities 3,698 2,368 1,938
Income taxes payable   -   -   339
TOTAL CURRENT LIABILITIES   10,068   8,032   8,571
 
Long-term income taxes payable 782 760 785
Deferred tax liabilities 36 171 411
Long-term debt 1,889 1,892 1,980
Other long-term liabilities 1,033 1,176 1,142
Stockholders' equity:
Preferred stock - - -
Common stock and capital in excess of par value 12,744 12,452 11,653
Accumulated other comprehensive income (loss) (136) 129 261
Retained earnings   26,303   27,780   30,848
TOTAL STOCKHOLDERS' EQUITY   38,911   40,361   42,762
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 52,719 $ 52,392 $ 55,651

INTEL CORPORATION
SUPPLEMENTAL FINANCIAL AND OTHER INFORMATION
(In millions)
     
Q3 2008 Q2 2008 Q3 2007
GEOGRAPHIC REVENUE:
Asia-Pacific $5,389 $4,805 $5,205
53 % 51 % 52 %
Americas $1,887 $1,985 $2,067
19 % 21 % 20 %
Europe $1,883 $1,741 $1,824
18 % 18 % 18 %
Japan $1,058 $939 $994
10 % 10 % 10 %
 
CASH INVESTMENTS:
Cash and short-term investments $8,287 $8,391 $10,796
Trading assets - marketable debt securities (1) 3,508   3,127   1,732  
Total cash investments $11,795 $11,518 $12,528
 
TRADING ASSETS:
Trading assets - equity securities
offsetting deferred compensation (2) $409 $443 $493
Total trading assets - sum of 1+2 $3,917 $3,570 $2,225
 
SELECTED CASH FLOW INFORMATION:
Depreciation $1,059 $1,042 $1,098
Share-based compensation $197 $243 $227
Amortization of intangibles $68 $63 $65
Capital spending ($1,374 ) ($1,151 ) ($1,088 )
Stock repurchase program ($2,117 ) ($2,500 ) ($750 )
Proceeds from sales of shares to employees, tax benefit & other $277 $381 $908
Dividends paid ($783 ) ($800 ) ($657 )
Net cash received/(used) for divestitures/acquisitions ($9 ) - ($42 )
 
EARNINGS PER SHARE INFORMATION:
Weighted average common shares outstanding - basic 5,603 5,699 5,837
Dilutive effect of employee equity incentive plans 38 50 79
Dilutive effect of convertible debt 51   51   51  
Weighted average common shares outstanding - diluted 5,692 5,800 5,967
 
STOCK BUYBACK:
Shares repurchased 93 109 30
Cumulative shares repurchased (in billions) 3.3 3.2 2.9
Remaining dollars authorized for buyback (in billions) $7.4 $9.5 $16.0
 
OTHER INFORMATION:
Employees (in thousands) 83.5 81.8 88.1

INTEL CORPORATION
SUPPLEMENTAL OPERATING RESULTS AND OTHER INFORMATION
($ in millions)
   
Three Months Ended   Nine Months Ended
OPERATING SEGMENT INFORMATION: Q3 2008 Q3 2007   Q3 2008 Q3 2007
Digital Enterprise Group
Microprocessor revenue 4,069 4,106 12,413 11,456
Chipset, motherboard and other revenue 1,249 1,406 3,719 3,887
Net revenue 5,318 5,512 16,132 15,343
Operating income 1,768 1,378 5,242 3,113
             
Mobility Group
Microprocessor revenue 3,387 2,832 8,855 7,671
Chipset and other revenue 1,294 1,139 3,292 2,903
Net revenue 4,681 3,971 12,147 10,574
Operating income 1,849 1,294 4,265 3,928
             
All Other
Net revenue 218 607 1,081 1,705
Operating loss (519 ) (528 ) (2,092 ) (1,872 )
             
Total
Net revenue 10,217 10,090 29,360 27,622
Operating income 3,098 2,144 7,415 5,169



Contact:

Intel Corporation
Michael Sullivan, 408-765-9785 (Investor Relations)
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Amy Kircos, 480-552-8803 (Media Relations)
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