- Third-Quarter revenue of $14.6 billion, up $1.1 billion or 8 percent year-over-year
- Record quarterly unit shipments of PCs, servers, tablets, phones and Internet of Things, the first time Intel has shipped more than 100 million microprocessors in a quarter
- Operating income of $4.5 billion, up 30 percent year-over-year
- Completed $4.2 billion share repurchase
“We are pleased by the progress the company is making,” said Intel CEO Brian Krzanich. “We achieved our best-ever revenue and strong profits in the third quarter. There is more to do, but our results give us confidence that we’re successfully executing to our strategy of extending our products across a broad range of exciting new markets.”
Q3 Key Business Unit Trends
- PC Client Group revenue of $9.2 billion, up 6 percent sequentially and up 9 percent year-over-year.
- Data Center Group revenue of $3.7 billion, up 5 percent sequentially and up 16 percent year-over-year.
- Internet of Things Group revenue of $530 million, down 2 percent sequentially and up 14 percent year-over-year.
- Mobile and Communications Group revenue of $1 million, consistent with expectations.
- Software and services operating segments revenue of $558 million, up 2 percent sequentially and up 2 percent year-over-year.
|Q3 2014||Q2 2014||vs. Q2 2014|
|Revenue||$14.6 billion||$13.8 billion||up 5%|
|Gross Margin||65.0%||64.5%||up 0.5 point|
|R&D and MG&A||$4.8 billion||$4.9 billion||down 2%|
|Operating Income||$4.5 billion||$3.8 billion||up 18%|
|Tax Rate||27.1%||28.7%||down 1.6 points|
|Net Income||$3.3 billion||$2.8 billion||up 19%|
|Earnings Per Share||66 cents||55 cents||up 20%|
|Q3 2014||Q3 2013||vs. Q3 2013|
|Revenue||$14.6 billion||$13.5 billion||up 8%|
|Gross Margin||65.0%||62.4%||up 2.6 points|
|R&D and MG&A||$4.8 billion||$4.7 billion||up 2%|
|Operating Income||$4.5 billion||$3.5 billion||up 30%|
|Tax Rate||27.1%||24.8%||up 2.3 points|
|Net Income||$3.3 billion||$3.0 billion||up 12%|
|Earnings Per Share||66 cents||58 cents||up 14%|
Intel’s Business Outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures, strategic investments and other significant transactions that may be completed after October 14.
- Revenue: $14.7 billion, plus or minus $500 million.
- Gross margin percentage: 64 percent, plus or minus a couple of percentage points.
- R&D plus MG&A spending: approximately $4.9 billion.
- Restructuring charges: approximately $45 million.
- Amortization of acquisition-related intangibles: approximately $65 million.
- Impact of equity investments and interest and other: approximately $175 million net gain.
- Depreciation: approximately $1.9 billion.
- Tax rate: approximately 28 percent.
- Full-year capital spending: $11.0 billion, plus or minus $500 million.
For additional information regarding Intel’s results and Business Outlook, please see the CFO commentary at: www.intc.com/results.cfm.
Status of Business Outlook
Intel’s Business Outlook is posted on intc.com and may be reiterated in public or private meetings with investors and others. The Business Outlook will be effective through the close of business on December 12 unless earlier updated; except that the Business Outlook for amortization of acquisition-related intangibles, impact of equity investments and interest and other, restructuring charges, and tax rate, will be effective only through the close of business on October 21. Intel’s Quiet Period will start from the close of business on December 12 until publication of the company’s fourth-quarter earnings release, scheduled for January 15. During the Quiet Period, all of the Business Outlook and other forward-looking statements 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. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” “should” and their variations identify forward-looking statements. Statements that refer to or are based on projections, uncertain events or assumptions also identify forward-looking statements. 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 important factors that could cause actual results to differ materially from the company’s expectations.
- Demand for Intel’s products is highly variable. Demand could be different from Intel’s expectations due to factors including changes in business and economic conditions; consumer confidence or income levels; customer acceptance of Intel’s and competitors’ products; competitive and pricing pressures, including actions taken by competitors; supply constraints and other disruptions affecting customers; changes in customer order patterns including order cancellations; and changes in the level of inventory at customers.
- Intel’s gross margin percentage could vary significantly from expectations based on capacity utilization; variations in inventory valuation, including variations related to the timing of qualifying products for sale; changes in revenue levels; segment product mix; the timing and execution of the manufacturing ramp and associated costs; excess or obsolete inventory; changes in unit costs; defects or disruptions in the supply of materials or resources; and product manufacturing quality/yields. Variations in gross margin may also be caused by the timing of Intel product introductions and related expenses, including marketing expenses, and Intel’s ability to respond quickly to technological developments and to introduce new products or incorporate new features into existing products, which may result in restructuring and asset impairment charges.
- Intel operates in highly competitive industries and its operations have high costs that are either fixed or difficult to reduce in the short term.
- The amount, timing and execution of Intel’s stock buyback program could be affected by changes in Intel’s priorities for the use of cash, such as operational spending, capital spending, acquisitions, and because of changes to Intel’s cash flows and changes in tax laws.
- 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 tax assets.
- Gains or losses from equity securities and interest and other could vary from expectations depending on gains or losses on the sale, exchange, change in the fair value or impairments of debt and equity investments; interest rates; cash balances; and changes in fair value of derivative instruments.
- Intel’s results could be affected 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 rates.
- Intel’s results could be affected by the timing of closing of acquisitions, divestitures and other significant transactions.
- 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, disclosure and other issues. An unfavorable ruling could include monetary damages or an injunction prohibiting Intel from manufacturing or selling one or more products, precluding particular business practices, impacting Intel’s ability to design its products, or requiring other remedies such as compulsory licensing of intellectual property.
A detailed discussion of these and other factors that could affect Intel’s results is included in Intel’s SEC filings, including the company’s most recent reports on Form 10-K and Form 10-Q.
Intel will hold a public webcast at 2 p.m. PDT today on its Investor Relations website at www.intc.com. A webcast replay and MP3 download will also be available on the site.
Intel plans to report its earnings for the fourth quarter of 2014 on January 15. Immediately following the earnings report, the company plans to publish a commentary by Stacy J. Smith, Intel CFO and executive vice president, at www.intc.com/results.cfm. A public webcast of Intel’s earnings conference call will follow at 2 p.m. PDT at www.intc.com.
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