Intel’s Q3 Results Beat Expectations, Shares Rise Despite Weak Guidance
The results are slightly ahead of the 53 cents a share on sales of $13.47 billion that Wall Street analysts had expected.
The company also said it expects fourth quarter revenue of $13.7 billion, plus or minus $500 million, which is well below the consensus of $14.02 billion. Investors are bidding up Intel shares by about two percent in after-hours trading.
Sales in the PC Client group, the business unit that sells microprocessors to PC vendors like Dell and Hewlett-Packard, saw a 3.5 percent decline year on year to $8.4 billion, accounting for more than 62 percent of overall sales.
The Data Center group that, among other things, sells chips and other technologies for servers used in cloud computing environments, saw its sales rise by more than 12 percent to $.29 billion, or more than 21.5 percent of sales.
The company said it saw a gross margin — a key metric of overall profitability — of 62.4 percent, up slightly from the year-ago period when it was 61 percent.
I’ll have more momentarily. But for now here’s Intel’s original announcement.
Intel Reports Third-Quarter Revenue of $13.5 Billion, Net Income of $3.0 Billion
Total revenue up 5 percent sequentially, flat year-over-year
Record Data Center Group revenue of $2.9 billion, up 12 percent year-over-year
Launched 4th Generation Intel® Core™ products enabling fanless, innovative tablet and 2 in 1 designs
More than forty 22nm products introduced for ultra-mobile device, networking, storage, and server market segments
SANTA CLARA, Calif., October 15, 2013 — Intel Corporation today reported third-quarter revenue of $13.5 billion, operating income of $3.5 billion, net income of $3.0 billion and EPS of $0.58. The company generated approximately $5.7 billion in cash from operations, paid dividends of $1.1 billion, and used $536 million to repurchase 24 million shares of stock.
“The third quarter came in as expected, with modest growth in a tough environment,” said Intel CEO Brian Krzanich. “We’re executing on our strategy to offer an increasingly broad and diverse product portfolio that spans key growth segments, operating systems and form factors. Since August we have introduced more than 40 new products for market segments from the Internet-of-Things to datacenters, with an increasing focus on ultra-mobile devices and 2 in 1 systems.”
Q3 Key Financial Information and Business Unit Trends
PC Client Group revenue of $8.4 billion, up 3.5 percent sequentially and down 3.5 percent year-over-year.
Data Center Group revenue of $2.9 billion, up 6.2 percent sequentially and up 12.2 percent year-over-year.
Other Intel architecture operating segments revenue of $1.1 billion, up 13.3 percent sequentially and down 9.3 percent year-over-year.
Gross margin of 62.4 percent, 1.4 percentage points above the midpoint of the company’s prior expectation of 61 percent.
R&D plus MG&A spending of $4.7 billion, slightly below the company’s prior expectation of approximately $4.8 billion.
Tax rate of 25 percent versus the company’s prior expectation 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 October 15.
Revenue: $13.7 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 $4.7 billion.
Amortization of acquisition-related intangibles: approximately $70 million.
Impact of equity investments and interest and other: approximately zero.
Depreciation: approximately $1.7 billion.
Restructuring and asset impairment charges: approximately $100 million.
Tax rate: approximately 25 percent.
Full-year capital spending: $10.8 billion, plus or minus $300 million.
For additional information regarding Intel’s results and Business Outlook, please see the CFO commentary at: www.intc.com/results.cfm.