Intel Posts Record First Quarter Revenue of $9.7 Billion

Record Server Microprocessor Revenue
Revenue up 9 Percent Year-over-Year
Gross Margin up 4 Points Year-over-Year
Operating Income up 23 Percent Year-over-Year
Net Income $1.4 Billion; EPS 25 Cents

Intel Corporation today announced record first-quarter revenue of $9.7 billion, operating income of $2.1 billion, net income of $1.4 billion and earnings per share (EPS) of 25 cents.

“Our first quarter results demonstrate a strengthening core business and a solid global market environment,” said Paul Otellini, Intel president and CEO. “We saw healthy demand for our leading-edge processors and chipsets across all segments. Looking forward, we remain optimistic about our growth opportunities as we continue to reap the benefits of our 45nm technology leadership.”

Results for the first quarter of 2008 included the effects of restructuring and asset impairment charges that lowered EPS by 4 cents. Results in last year’s first quarter included tax adjustments along with the effects of restructuring and asset impairment charges that together increased EPS by approximately 5 cents. Results for the fourth quarter of 2007 included the effects of restructuring and asset impairment charges that reduced EPS by approximately 2.5 cents.

Financial and Key Product Information
Intel’s microprocessor and chipset businesses came in as expected. Total microprocessor units were lower sequentially, with the ASP approximately flat.
Consistent with the company’s updated expectations, NAND revenue was flat as significant price declines offset unit growth.
Gross margin was 53.8 percent, in line with the company’s revised expectation.
Restructuring and asset impairment charges of $329 million included $275 million in impairment charges for the assets transferred to Numonyx.
The effective tax rate was 33.5 percent, higher than the previous expectation of approximately 31 percent, primarily driven by a higher than expected proportion of profits being in higher-tax jurisdictions along with the tax effects of impairment charges related to the assets sold to Numonyx.
The company used $2.5 billion to repurchase 122 million shares of its common stock.

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 April 14.

Q2 2008:
Revenue: Between $9.0 billion and $9.6 billion. The forecast reflects a significant reduction in NOR flash memory revenue as a result of the Numonyx transaction.
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 $250 million.
Net gains from equity investments and interest and other: Approximately $75 million.
Tax rate: Approximately 33 percent.
Depreciation: Approximately $1.1 billion.

Full-Year 2008:
Gross margin: 57 percent plus or minus a few points, unchanged.
R&D: Approximately $6 billion, higher than the previous expectation of approximately $5.9 billion.
MG&A: Approximately $5.5 billion, unchanged.
Capital spending: $5.2 billion plus or minus $200 million, unchanged.
Tax rate: The tax rate for the third and fourth quarters is expected to be approximately 33 percent.
Depreciation: $4.4 billion plus or minus $100 million, unchanged.