INTEL Q4 Earning Report 2008

Posted by Kris | Friday, January 16, 2009 | | 0 comments »

It is official that INTEL (INTC) will not provide any incremement or offer promotions for their employess in 2008.  Big companies don't fare that well also. Small companies perhaps will be less impacted as their expenses are much smaller like ALTERA (ALTR) which is a fabless company.

Seeing the below Q4 report card will tell you why. See the highlighted values.

Fourth-Quarter Revenue $8.2 Billion, down 19 Percent Sequentially
Gross Margin 53 Percent, down 6 Points Sequentially
Operating Income $1.5 Billion, down 50 Percent Sequentially
Quarterly Net Income $234 Million; EPS 4 Cents
2008 Revenue $37.6 Billion, down 2 Percent Year-over-Year or up Slightly Adjusted for Divestitures
Gross Margin 55 Percent, up 3.5 Points Year-over-Year
Operating Income $9 Billion, up 9 Percent Year-over-Year
Annual Net Income $5.3 Billion; EPS 92 Cents

SANTA CLARA, Calif.--(BUSINESS WIRE)--Intel Corporation today reported fourth-quarter revenue of $8.2 billion, operating income of $1.5 billion, net income of $234 million and earnings per share (EPS) of 4 cents. The results included a billion-dollar negative impact from the previously announced reduction in the carrying value of the company’s Clearwire investments.

For 2008, Intel posted revenue of $37.6 billion, operating income of $9 billion, net income of $5.3 billion and EPS of 92 cents. Intel generated approximately $11 billion in cash from operations, paid cash dividends of $3.1 billion and used $7.1 billion to repurchase 324 million shares of common stock.

“The economy and the industry are in the process of resetting to a new baseline from which growth will resume," said Paul Otellini, Intel president and CEO. "While the environment is uncertain, our fundamental business strategies are more focused than ever. Intel will continue to extend its manufacturing leadership, drive product innovation, develop new markets and implement operating efficiencies that have already taken more than $3 billion out of our ongoing cost structure since 2006. Intel has weathered difficult times in the past, and we know what needs to be done to drive our success moving forward. Our new technologies and new products will help us ignite market growth and thrive when the economy recovers.”

Quarterly Results Summary
Q4 2008 vs. Q4 2007 vs. Q3 2008
Revenue $8.2 billion -23% -19%
Operating Income $1.5 billion -49% -50%
Net Income $234 million -90% -88%
EPS 4 cents -89% -89%
Annual Results Summary
2008 vs. 2007
Revenue $37.6 billion -2%
Operating Income $9 billion +9%
Net Income $5.3 billion -24%
EPS 92 cents -22%
Key Financial Information (Sequential)

Microprocessor and chipset units were significantly lower versus the third quarter.

Revenue from Intel® Atom™ microprocessors and chipsets was $300 million, up 50 percent.
The total microprocessor average selling price (ASP) was flat.

Excluding shipments of Intel Atom microprocessors, the ASP was higher.

Gross margin of 53.1 percent was lower than 58.9 percent in the third quarter. The decrease was primarily due to higher factory underutilization charges and higher inventory write-offs.

Spending was $2.6 billion, lower than $2.9 billion in the third quarter, driven by lower revenue- and profit-related expenses along with targeted spending reductions.

The net loss from equity investments and interest and other was $1.1 billion, higher than the forecast of a $50-million loss, primarily due to a billion-dollar reduction in the carrying value of the company’s investments in Clearwire.

The effective tax rate was 36.6 percent, higher than the expectation of approximately 29 percent.
Key Financial Information (Annual)

Revenue was down 2 percent year-over-year. Adjusted for divestitures, revenue was up slightly in 2008.

Intel had record microprocessor units, server revenue and mobile microprocessor revenue.

Chipset and wireless connectivity products set new unit and revenue records.

Gross margin was 55.5 percent, up from 52 percent in 2007.

Intel removed more than $800 million of cost from the company in 2008 under the structure and efficiency program launched in 2006. Cumulative spending reductions under the program to date exceeded $3 billion.
Business Outlook

Intel’s Business Outlook does not include the potential impact of any mergers, acquisitions, divestitures or other business combinations that may be completed after Jan. 14. Current uncertainty in global economic conditions makes it particularly difficult to predict product demand and other related matters and makes it more likely that Intel’s actual results could differ materially from expectations. Consequently, the company is providing less quantitative guidance than in previous quarters.

Q1 2009:

Due to economic uncertainty and limited visibility, Intel is not providing a revenue outlook at this time. For internal purposes, the company is currently planning for revenue in the vicinity of $7 billion.

Gross margin: The percentage is expected to decline to the low 40s primarily due to higher underutilization charges and 32nm start-up costs. Gross margin is subject to changes in demand levels and pricing that could impact inventory write-offs, mix and unit costs, and potentially create several additional points of margin variability.

Spending (R&D plus MG&A): Approximately $2.5 billion.

Restructuring and asset impairment charges: Approximately $160 million.

Net loss from equity investments and interest and other: Approximately $130 million.

Depreciation: Approximately $1.2 billion.

Full-Year 2009:

Spending (R&D plus MG&A): Between $10.4 billion and $10.6 billion.
R&D: Approximately $5.4 billion.
Capital spending: Expected to be flat to slightly down from 2008.
Depreciation: $4.8 billion plus or minus $100 million.
Tax rate: Approximately 27 percent.
Status of Business Outlook