Intel Raises Third-Quarter Revenue Expectations
Friday, September 16, 2016 9:00:02 AM ET
Intel Corporation today announced that third-quarter revenue is expected
to be above the companys previous outlook. The company now expects
third-quarter revenue to be $15.6 billion, plus or minus $300 million,
as compared to the previous range of $14.9 billion, plus or minus $500
million. The increase in revenue is primarily driven by replenishment of
PC supply chain inventory. The company is also seeing some signs of
improving PC demand.
The company is forecasting the mid-point of the third-quarter GAAP gross
margin range at 62 percent, plus or minus a couple of points, up 2
points versus the prior third-quarter GAAP outlook gross margin midpoint
of 60 percent, driven mostly by higher PC unit volume. The midpoint of
the third-quarter non-GAAP gross margin range is now forecasted at 63
percent, plus or minus a couple of points, up 1 point versus the prior
third-quarter non-GAAP outlook gross margin midpoint of 62 percent.
Third-quarter R&D plus MG&A spending is expected to be approximately
$5.2 billion, $100 million higher than the prior expectation of
approximately $5.1 billion. Third-quarter gains and losses from equity
investments and interest and other income are expected to be a net loss
of approximately $125 million, as compared to the prior expectation of a
net loss of approximately $75 million. The tax rate for the third
quarter is expected to be 22 percent, as compared to the prior
expectation of 21 percent.
All other expectations have been withdrawn and guidance will be updated
with the companys third-quarter earnings report on Oct. 18.
Intels Business Outlook for the third quarter 2016 was originally
published in the companys second quarter 2016 earnings release,
available at www.intc.com.
Intels updated Business Outlook does not include the potential impact
of any business combinations, asset acquisitions, divestitures,
strategic investments and other significant transactions that may be
completed after Sept. 16. Intels updated Business Outlook is posted on
intc.com and may be reiterated in public or private meetings with
investors and others through the close of business on Sept. 16. Intels
Quiet Period will start from the close of business on Sept. 16 until
publication of the companys third-quarter earnings release, scheduled
for Oct. 18. During the Quiet Period, all of the Business Outlook and
other forward-looking statements disclosed in the companys news
releases and filings with the SEC should be considered as historical,
speaking as of prior to the Quiet Period only and not subject to an
update by the company.
The above statements and any others in this release that refer to future
plans and expectations are forward-looking statements that involve a
number of risks and uncertainties. Words such as "anticipates,"
"expects," "intends," "goals," "plans," "believes," "seeks,"
"estimates," "continues," "may," "will," "should," and variations of
such words and similar expressions are intended to identify such
forward-looking statements. Statements that refer to or are based on
projections, uncertain events or assumptions also identify
forward-looking statements. Many factors could affect Intels actual
results, and variances from Intels current expectations regarding such
factors could cause actual results to differ materially from those
expressed in these forward-looking statements. Intel presently considers
the following to be important factors that could cause actual results to
differ materially from the companys expectations.
Demand for Intels products is highly variable and could differ from
expectations due to factors including changes in business and economic
conditions; consumer confidence or income levels; the introduction,
availability and market acceptance of Intels products, products used
together with Intel products and competitors products; competitive
and pricing pressures, including actions taken by competitors; supply
constraints and other disruptions affecting customers; changes in
customer order patterns including order cancellations; and changes in
the level of inventory at customers.
Intels gross margin percentage could vary significantly from
expectations based on capacity utilization; variations in inventory
valuation, including variations related to the timing of qualifying
products for sale; changes in revenue levels; segment product mix; the
timing and execution of the manufacturing ramp and associated costs;
excess or obsolete inventory; changes in unit costs; defects or
disruptions in the supply of materials or resources; and product
manufacturing quality/yields. Variations in gross margin may also be
caused by the timing of Intel product introductions and related
expenses, including marketing expenses, and Intels ability to respond
quickly to technological developments and to introduce new products or
incorporate new features into existing products, which may result in
restructuring and asset impairment charges.
Intels results could be affected by adverse economic, social,
political and physical/infrastructure conditions in countries where
Intel, its customers or its suppliers operate, including military
conflict and other security risks, natural disasters, infrastructure
disruptions, health concerns, fluctuations in currency exchange rates,
and the United Kingdom referendum to withdraw from the European Union.
Results may also be affected by the formal or informal imposition by
countries of new or revised export and/or import and doing-business
regulations, which could be changed without prior notice.
Intel operates in highly competitive industries and its operations
have high costs that are either fixed or difficult to reduce in the
The amount, timing and execution of Intels stock repurchase program
could be affected by changes in Intels priorities for the use of
cash, such as operational spending, capital spending, acquisitions,
and as a result of changes to Intels cash flows or changes in tax
Intels expected tax rate is based on current tax law and current
expected income and may be affected by the jurisdictions in which
profits are determined to be earned and taxed; changes in the
estimates of credits, benefits and deductions; the resolution of
issues arising from tax audits with various tax authorities, including
payment of interest and penalties; and the ability to realize deferred
Gains or losses from equity securities and interest and other could
vary from expectations depending on gains or losses on the sale,
exchange, change in the fair value or impairments of debt and equity
investments, interest rates, cash balances, and changes in fair value
of derivative instruments.
Product defects or errata (deviations from published specifications)
may adversely impact our expenses, revenues and reputation.
Intels results could be affected by litigation or regulatory matters
involving intellectual property, stockholder, consumer, antitrust,
disclosure and other issues. An unfavorable ruling could include
monetary damages or an injunction prohibiting Intel from manufacturing
or selling one or more products, precluding particular business
practices, impacting Intels ability to design its products, or
requiring other remedies such as compulsory licensing of intellectual
Intels results may be affected by the timing of closing of
acquisitions, divestitures and other significant transactions. In
addition, risks associated with our proposed transaction with TPG to
collaborate to establish McAfee as an independent cybersecurity
company are described in the "Forward Looking Statements" section of
Intels press release dated Sept. 7, 2016, which risk factors are
incorporated by reference herein.
Intels results may be affected by factors that could cause the
implementation of, and expected results from, the restructuring plan
announced on April 19, 2016, to differ from Intels expectations. A
detailed description of risks associated with the restructuring plan
and factors that could cause actual results of the restructuring plan
to differ is set forth in the "Forward Looking Statements" section of
Intels press release entitled "Intel Announces Restructuring
Initiative to Accelerate Transformation" dated April 19, 2016, which
risk factors are incorporated by reference herein.
A detailed discussion of these and other factors that could affect
Intels results is included in Intels SEC filings, including the
companys most recent reports on Forms 10-K and 10-Q.
Intel (INTC ) expands the boundaries of technology to make the
most amazing experiences possible. Information about Intel can be found
Intel, the Intel logo, Core, and Ultrabook are trademarks of Intel
Corporation or its subsidiaries in the United States and other countries.
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SOURCE: Intel Corporation
Trey Campbell, 503-696-0431
Cara Walker, 503-696-0831