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Intel Corporation (INTC)
F1Q10 Earnings Call
April 10, 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
John Pitzer - Credit Suisse
Glen Young – Citi
Chris Stanley [ph] – JP Morgan
Tim Luke - Barclays Capital
Kevin Cassidy – Thomas Weisel Partners
Hans Mosesmann – Raymond James
Mark Lipacis - Morgan Stanley
James Covello - Goldman Sachs
Patrick Wang – Wedbush Morgan
Uche Orji - UBS
Stacy Rasgon – Sanford Bernstein
David Wong – Wells Fargo
Ross Seymore – Deutsche Bank
Sumit Dhanda - Banc of America Merrill Lynch
Doug Freedman - Broadpoint
Mahesh Sanganeria – RBC Capital Markets
Previous Statements by INTC
» Intel Corporation F4Q09 (Qtr End 12/26/09) Earnings Call Transcript
» Intel Q3 2009 Earnings Call Transcript
» Intel Q2 2009 Earnings Call Transcript
R. Kevin Sellers
Thank you. It sounds like we had some background noise and I hope that was taken care of. Thank you, operator. Welcome everyone to Intel's first quarter 2010 earnings conference call. I am here with Paul Otellini, our President and CEO and Stacy Smith, our Chief Financial Officer.
A few important items before we begin. First, we posted our earnings release, CFO commentary and updated financial statements to our investor website, intc.com, for anyone who still needs access to that information. Also if during this call we use any non-GAAP financial measures or references we will post the appropriate GAAP financial reconciliations to our website as well. Following brief prepared remarks from both Paul and Stacy we will be happy to take questions.
As we begin, let me remind everyone that 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. One final note, we have scheduled our annual Investor Day on May 11th at the Intel headquarters here in Santa Clara. We look forward to seeing many of you here. If any of you need additional information about that event please contact Intel Investor Relations directly.
So with that, let me hand it over to Paul.
Thanks, Kevin. A year ago at this time the industry was in the midst of a sharp correction with many expecting it to continue for an extended period. We saw signals of a bottoming then and now a year later the industry has nearly fully recovered.
At Intel we focused on expanding our Nehalem architecture, getting our 32nm processor technology ready and in designing alternatives and derivatives of our new Atom processor for many new market segments. As a result of that focus we started this year with the best product line up we have ever had with leadership in all segments and categories. Demand for these new products has been incredible and as a result Intel achieved record first quarter revenue and in operating income.
It was notable this quarter the demand for our higher end PC products was particularly strong which helped improve margins and profitability. Our mobile business set a new revenue record as demand for notebooks continues to be excellent. We are also seeing signs of corporate demand returning which we believe will continue to improve given the age of the corporate PC fleet and the compelling ROI that our new generation of servers presents.
Looking at the supply chain we continue to see aggregate inventories operating within normal, healthy ranges. Intel’s own inventory remains lean. OEM inventories are flat quarter-over-quarter and downstream channel inventories are also within normal ranges. We watch inventory levels and sell through activity very carefully and we remain comfortable with the supply chain conditions.
In our manufacturing environment our factory teams have executed the ramp of our 32nm process superbly. We exceeded output expectations with lower costs than originally anticipated and are currently shipping over SKU’s on 32nm. 32nm is our fastest ramping process ever and I am pleased to note we are accelerating the ramp of our third and fourth 32nm factories faster than our original plan such that by early Q4 we will have four factories in production on 32nm.
Lastly, we are excited about our next generation of processors, code named Sandy Bridge. We began volume sampling in Q1, shipping thousands of samples to a broad range of customers and are planning for volume production later this year.
As we look forward we are optimistic about the prospects for our business for the rest of 2010 and beyond. Our product portfolio combined with our excellent execution and the ongoing benefits from restructuring have us positioned for continued profitable growth. This is a great way to begin 2010 and I look forward to seeing many of you here in May for our Investor Meeting where we will talk in more detail about how we plan to build on this momentum and further exploit the growth opportunities before us.
With that let me turn the meeting back over to Stacy.
Thanks Paul. The strength in our business model can be seen in the first quarter results. Record first quarter revenue of $10.3 billion resulted in record first quarter operating profit of $3.4 billion and cash flow from operations of approximately $4 billion.
These better than expected financials resulted from strong sales of our new products. Micro processing unit sales declined slightly less than seasonal and average selling prices for microprocessors were up slightly quarter-over-quarter. Supply chain inventory levels appear to be healthy after several quarters of replenishment. The mobile computing segment was particularly strong with customer demand for our new products leading to an increase in mobile microprocessor average selling prices and record mobile microprocessor revenue.