Intel Corporation (INTC)
F4Q09 Earnings Call
January 14, 2010 5:30 pm ET
R. Kevin Sellers - Vice President, Investor Relations
Paul S. Otellini - President, Chief Executive Officer, Director
Stacy J. Smith - Chief Financial Officer, Vice President
Ross Seymore – Deutsche Bank
Tim Luke - Barclays Capital
Mark Lipacis - Morgan Stanley
Uche Orji - UBS
Doug Freedman - Broadpoint
Adam Benjamin – Jefferies
Manish Goyle - C.R.E.F.
Stacy Rasgon – Sanford Bernstein
Glen Yeung - Citigroup
John Pitzer - Credit Suisse
Sumit Dhanda - Banc of America Merrill Lynch
James Covello - Goldman Sachs
Graham Tanaka – Tanaka Capital Management
Craig Berger - FBR Capital Markets
Suji De Silva – Kaufman Bros.
Gus Pritchard - Piper Jaffray
Brendan Furlong - Miller Tabak
Hans Mosesmann – Raymond James
Previous Statements by INTC
» Intel Q3 2009 Earnings Call Transcript
» Intel Q2 2009 Earnings Call Transcript
» Intel Corp. Q1 2009 Earnings Call Transcript
R. Kevin Sellers
Thank you and welcome everyone to Intel's fourth quarter 2009 earnings conference call. I am joined today as usual by our Chief Executive Officer, Paul Otellini and Chief Financial Officer Stacy Smith. Our earnings release and updated financial statements were released today at approximately 1:15 PDT and can be found on our investor website, intc.com.
This quarter we continued the practice that we started last quarter of posting additional management commentary from CFO Stacy Smith to our investor website. This commentary was posted at approximately 1:30 p.m. PDT and contains added detail about our quarterly performance that was previously reviewed in prepared remarks during our conference call.
As we begin our call, let me remind everyone that today’s discussion contains forward-looking statements based on the environment as we currently see it and as such does include risks and uncertainties. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially. If during our call today there are any non-GAAP financial references made, we will post the appropriate GAAP financial reconciliations on our investor website.
So with that, let me hand it over to Paul for some comments followed by brief remarks from Stacy. Paul?
Thanks, Kevin. Our fourth quarter results cap a great year of execution and innovation for Intel. We started the year in one of the deepest recessions in our history and emerged from it with better products and technology driving new demand for computing worldwide.
Our restructuring efforts have born real fruit by improving the operational efficiency of the company, driving relatively good results in challenging times and exceptional results in a stronger market. The demand picture in the quarter reflected broad based strength across all regions and all product categories with notebooks leading the way. Our product mix was also a notable highlight. Demand for our latest generation of processors, both PC and server, was particularly strong providing an ASP uplift in the quarter.
Inventory levels remain in good shape with OEM component inventories roughly flat quarter-over-quarter and below levels of a year ago. Distributor inventories are down sequentially. The combination of much stronger sell through and lower year-over-year inventory levels gives us comfort that the supply chain continues to operate very efficiently.
Looking across our product segments servers had a very strong quarter. The value proposition of Nehalem is clearly evident and we are seeing a demand shift towards the high end of the performance stack, improving average selling prices. Looking ahead over the next three months we are planning to refresh our entire server product line with the new 32nm Xeon in the single, dual and multiprocessor segments.
It is noteworthy to point out that the Nehalem EX, our multiprocessor version, represents the biggest leap in performance in the history of the Xeon brand. We remain in an excellent position to benefit from the build out of cloud infrastructure as well as the reconfiguration of existing space centers for power performance efficiency improvements.
Our Atom processor business also continues to do very well both in netbooks as well as in winning new designs for our growth initiatives. Atom design momentum is very strong with our new Pine Trail platform in over 80 netbook designs. In the embedded space we now have over 600 Atom based design wins and over 2,500 design engagements across 230 customers, 93 of which are brand new customers to Intel.
At CES we also demonstrated progress with handheld and consumer electronics platforms built around Atom cores that were very well received. We demonstrated for the first time the LG GW990, a smart phone built with our yet to be released Atom Moorestown platform which was awarded Best Smart Phone of the show. This demonstrates the power of our architecture in bringing an uncompromising computing experience to handheld devices. Expect more meaningful news and announcements around these businesses during 2010.
Our notebook business was exceptional this quarter with demand very strong across the globe. We have been carefully preparing for the shift to mobile and our product strategy is a reflection of that. To further enhance our PC lineup, at CES we formally launched 27 new processors produced with our leading edge 32 nm process technology, the biggest consumer launch of new processors since Centrino.
Our new core processors are the first ever mainstream PC processors to integrate the graphics engine onto the CPU. This is Moore’s law at work driving increased performance and improved power and foreign factor characteristics to our new platforms. Our new graphics engine is notable in that it offers full HD video, great mainstream gaming and enhanced 3D capability. I am happy to report that early demand for these products is excellent.