Intel reports 3% fall in second-quarter 2019 financial results

Adjusted second-quarter earnings-per-share (EPS) stood at $1.06, exceeding April guidance of 89 cents.

In the second quarter, the company generated approximately $7.6 billion in cash from operations, paid dividends of $1.4 billion and used $3.0 billion to repurchase 67 million shares of stock.

Second-quarter revenue of $16.5 billion was $900 million higher than April guidance. Intel achieved 1 per cent growth in the PC-centric business while data-centric revenue declined 7 per cent.

Intel also announced an agreement for Apple to acquire majority of Intel’s smartphone modem business.

Intel forecast 2019 sales of $69.5 billion and adjusted earnings per share of $4.40, versus the average analyst estimates of $68.5 billion and $4.23, respectively.

“Second quarter results exceeded our expectations on both revenue and earnings, as the growth of data and compute-intensive applications are driving customer demand for higher performance products in both our PC-centric and data-centric businesses,” said Bob Swan, Intel CEO. “Based on our outperformance in the quarter, we’re raising our full-year guidance. Intel’s ambitions are as big as ever, our collection of assets is unrivaled, and our transformation continues.”

The PC-centric business (CCG) was up 1 per cent in the second quarter due to a strong mix of Intel's higher performance products, strength in the commercial segment, and customers buying ahead of possible tariff impacts. New, 10nm-based 10th Gen Intel® Core™ processors (code-named "Ice Lake") are now shipping, and expected to be in volume systems on retail shelves this 2019 holiday selling season.

Collectively, Intel's data-centric businesses declined 7 per cent YoY in the second quarter. In the Data Center Group (DCG), the communications service provider segment grew 3 percent while the cloud segment declined 1 per cent and enterprise and government revenue declined 31 per cent. The Internet of Things Group (IOTG) achieved record revenue, up 12 per cent YoY (23 per cent excluding Wind River) on broad strength and increased demand for higher performance processors. Mobileye achieved second-quarter revenue of $201 million, up 16 per cent YoY on continued customer momentum. Intel's memory business (NSG) was down 13 per cent YoY in a challenging pricing environment. Intel's Programmable Solutions Group (PSG) revenue was down 5 percent YoY in the second quarter.

Intel's guidance for the third-quarter and full-year 2019 includes both GAAP and non-GAAP estimates. Reconciliations between these GAAP and non-GAAP financial measures are included below.

Intel said its business outlook does not include the potential impact of its agreement to sell the majority of its smartphone modem business, announced today. Upon close, we expect a gain on divestiture of approximately $500 million net of tax, which will be excluded on a non-GAAP basis. Intel's business outlook also does not include any other business combinations, asset acquisitions, divestitures, strategic investments and other significant transactions that may be completed after 25 July 2019. Actual results may differ materially from Intel’s Business Outlook as a result of various other factors, it added.

Intel's results could be affected by litigation or regulatory matters involving intellectual property, stockholder, consumer, antitrust, commercial, 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 Intel's ability to design its products, or requiring other remedies such as compulsory licensing of intellectual property.

Intel's results may be affected by the timing of closing of acquisitions, divestitures and other significant transactions.