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Last Updated: Jan 16th, 2008 - 03:48:39 |
Intel reports 51% rise in Q4 2007 net income but cautious outlook for 2008 sends shares plunging 14% in after-hours trading
By Finfacts Team
Jan 16, 2008, 03:34
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| US chip giant Intel is Ireland's largest industrial employer and Ireland's biggest foreign direct investment project. Since 1989, Intel has invested over $7 billion transforming the 360 acre former stud farm campus in Leixlip, Co. Kildare into a state of the art manufacturing centre of excellence. Intel’s Leixlip campus is County Kildare is Intel’s fourth largest manufacturing site and the largest fabrication facility outside the United States. The campus employs over 5,000 people, directly and indirectly. There are currently four semi-conductor factories or FABs on site; Fab 10 and Fab 14 have merged to form Ireland Fab Operations (IFO), Fab 24, and the recently opened Fab 24-2 which is one of the most technically advanced, high-volume semiconductor manufacturing sites in the world. It produces the latest Intel products; the Intel Core 2 Duo and Intel Core 2 Extreme processors for consumer, business, desktop and laptop PCs. |
Intel, the giant US computer chip maker, on Tuesday announced record fourth-quarter revenue of $10.7 billion, operating income of $3 billion, net income of $2.3 billion - up 51 percent, and earnings per share (EPS) of 38 cents. For 2007, operating income grew 45 percent, reflecting the company's ongoing efficiency programs, with profits growing significantly faster than revenue.
"2007 was a breakthrough year for innovation at Intel," said Paul Otellini, Intel president and CEO. "We realized the benefits of our investments in new products and our efforts to drive efficiencies. Our customers embraced the Intel Core microarchitecture, extending our competitive leadership and driving a significant gain in operating results. We enter 2008 with the best combination of products, silicon technology and manufacturing leadership in our history."
The cautious outlook by the chip maker, which is viewed as a bellwether of the tech industry sent its shares down more than 14 percent in after-hours trading.
For the first quarter, the company forecast a range of revenue with a midpoint that was below the analyst estimates. Intel estimated its gross profit margin in the current quarter at 56%, plus or minus a couple of percentage points. For the year, the company put the percentage at 57%, plus or minus a few percentage points.
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Q4 2007 |
vs. Q4 2006 |
vs. Q3 2007 |
| Revenue |
$10.7 billion |
+10.5% |
+6% |
| Operating Income |
$3 billion |
+105% |
+42% |
| Net Income |
$2.3 billion |
+51% |
+27% |
| EPS |
38 cents |
+46% |
+27% |
| Results for the fourth quarter of 2007 included the effects of restructuring and asset impairment charges that reduced operating income by $234 million and EPS by approximately 2.5 cents. Results for the fourth quarter of 2006 included the effects of restructuring and asset impairment charges that reduced operating income by $457 million as well as a divestiture gain recorded in “interest and other, net.” The charges and gain resulted in a net increase to EPS of approximately 1 cent. |
For 2007, Intel achieved revenue of $38.3 billion, operating income of $8.2 billion, net income of $7 billion and EPS of $1.18. Intel generated more than $12 billion in cash from operations, paid record cash dividends of $2.6 billion and used $2.75 billion to repurchase 111 million shares of common stock.
| Full Year |
|
2007 |
|
vs. 2006 |
| Revenue |
|
$38.3 billion |
|
+8% |
| Operating Income |
|
$8.2 billion |
|
+45% |
| Net Income |
|
$7 billion |
|
+38% |
| EPS |
|
$1.18 |
|
+37% |
Financial Review
- Record revenue of $10.7 billion was $88 million below the midpoint of expectations. Revenue for computing-related products was as expected while revenue for NAND memory was lower than expected, primarily due to lower average selling prices (ASPs).
- Gross margin was 58.1 percent, up 6.9 points from the third quarter driven by higher unit volumes and lower unit costs, 45nm microprocessor qualification and lower 45nm start-up costs. Gross margin in the third quarter reflected the impact of a legal settlement.
- Spending was in line with expectations.
- Restructuring and asset impairment charges of $234 million were higher than the previous forecast of $130 million due to a write-down of NOR flash assets related to the proposed Numonyx transaction.
Key Product Trends (Sequential)
- Total microprocessor units set a record; the ASP (Application Service Provider service) was flat.
- Chipset units set a record.
- Total flash units were flat.
Business Outlook
Q1 2008 Outlook
- Revenue: Between $9.4 billion and $10 billion.
- Gross margin: 56 percent plus or minus a couple of points.
- Spending (R&D plus MG&A): Between $2.8 billion and $2.9 billion.
- Restructuring and asset impairment charges: Approximately $100 million.
- Net gains from equity investments and interest and other: Approximately $175 million.
- Tax rate: Approximately 31 percent.
- Depreciation: Approximately $1.1 billion.
2008 Outlook
- Gross margin: 57 percent plus or minus a few points.
- R&D: Approximately $5.9 billion.
- MG&A: Approximately $5.5 billion.
- Capital spending: $5.2 billion plus or minus $200 million.
- Tax rate: Approximately 31 percent.
- Depreciation: $4.4 billion plus or minus $100 million.
