Intel Q2 Earnings Come in Below Expectations
Intel’s second-quarter earnings just crossed the wires, and they’re below what analysts had expected.
Earnings per share were 39 cents on sales of $12.8 billion, which amounts to a clean miss of the 40 cents and $12.9 billion analysts had expected. Intel shares initially fell by more than two percent in after-hours trading as the earnings crossed, but they then recovered and rose slightly. Update: As of 4:38 pm ET the shares are down by two percent again to $23.69.
Intel CEO Brian Krzanich, presiding over his first quarterly earnings result as Intel’s CEO, said in a statement that he feels confident, despite the miss. “In my first two months as CEO, I have listened to a wide variety of views about Intel and our industry from customers, employees and my leadership team and I am more confident than ever about our opportunity as a company.”
Intel’s outlook was also a little lighter than expected: It forecast sales of $13.5 billion, slightly shy of the consensus outlook of $13.7 billion. It said it expects gross margins to be 61 percent, and as had been expected, it has slashed its 2013 capital spending plan by $1 billion to about $11 billion plus or minus $500 million. Previously that figure had been at $12 billion.
Here’s Intel’s full announcement.
Intel Reports Second-Quarter Revenue of $12.8 Billion, Net Income of $2.0 Billion
4th Generation Intel Core processor and Silvermont architecture unveiled to strong acceptance
New Intel Atom processor and Intel LTE solution tapped for Samsung* GALAXY Tab-3 10.1-inch
New leadership team implemented one of the most significant management reorganizations in a decade
SANTA CLARA, Calif., July 17, 2013 — Intel Corporation today reported second-quarter revenue of $12.8 billion, operating income of $2.7 billion, net income of $2.0 billion and EPS of $0.39. The company generated approximately $4.7 billion in cash from operations, paid dividends of $1.1 billion, and used $550 million to repurchase 23 million shares of stock.
“In the second quarter, we delivered on our quarterly outlook and made several key product announcements,” said Intel CEO Brian Krzanich. “In my first two months as CEO, I have listened to a wide variety of views about Intel and our industry from customers, employees and my leadership team and I am more confident than ever about our opportunity as a company.”
“Looking ahead, the market will continue buying a wide range of computing products,” he added. “Intel Atom and Core processors and increased SOC integration will be Intel’s future. We will leave no computing opportunity untapped. To embrace these opportunities, I’ve made it Intel’s highest priority to create the best products for the fast growing ultra-mobile market segment.”
Q2 Key Financial Information and Business Unit Trends
PC Client Group revenue of $8.1 billion, up 1.4 percent sequentially and down 7.5 percent year-over-year.
Data Center Group revenue of $2.7 billion, up 6.1 percent sequentially and flat year-over-year.
Other Intel® Architecture Group revenue of $942 million, down 3.7 percent sequentially and down 15.0 percent year-over-year.
Gross margin of 58 percent, up 2 percentage points sequentially and down 5 percentage points year-over-year.
R&D plus MG&A spending of $4.7 billion, in line with the company’s expectation of approximately $4.7 billion.
Tax rate of 26 percent.
Intel’s Business Outlook does not include the potential impact of any business combinations, asset acquisitions, divestitures or other investments that may be completed after July 17.
Revenue: $13.5 billion, plus or minus $500 million.
Gross margin percentage: 61 percent, plus or minus a couple of percentage points.
R&D plus MG&A spending: approximately $4.8 billion.
Amortization of acquisition-related intangibles: approximately $70 million.
Impact of equity investments and interest and other: approximately $400 million net gain.
Depreciation: approximately $1.7 billion.
Revenue: Approximately flat year-on-year, down from prior expectations of low single digit percentage increase.
Gross margin percentage: 59 percent, plus or minus a couple percentage points, down from prior expectations of 60 percent, plus or minus a few of percentage points.
R&D plus MG&A spending: $18.7 billion, plus or minus $200 million, down $200 million from prior expectations.
Amortization of acquisition-related intangibles: approximately $300 million, unchanged from prior expectations.
Depreciation: $6.8 billion, plus or minus $100 million, unchanged from prior expectations.
Tax Rate: approximately 26 percent for each of the remaining quarters of the year.
Full-year capital spending: $11.0 billion, plus or minus $500 million, down $1.0 billion from prior expectations.
For additional information regarding Intel’s results and Business Outlook, please see the CFO commentary at: www.intc.com/results.cfm.