Expense for Legal Settlement with AMD to Be Taken in Q4
Legal settlement to result in Q4 expense of $1.25 billion.
Spending (R&D plus MG&A) now expected to be approximately $4.2 billion.
Tax rate expected to decline to about 20 percent.
SANTA CLARA, Calif. — (BUSINESS WIRE) — November 12, 2009 —
As a result of the legal settlement announced today with Advanced Micro
Devices (AMD), Intel Corporation adjusted its fourth-quarter financial
expectations to reflect the impact of the $1.25 billion settlement
payment. Intel now expects spending (R&D plus MG&A) in the fourth
quarter to be approximately $4.2 billion, up from $2.9 billion. In
addition, the effective tax rate is expected to be approximately 20
percent, down from 26 percent. All other expectations are unchanged.
Under terms of the agreement, the parties will end all outstanding
litigation including antitrust and patent cross license disputes. AMD
will withdraw all of its regulatory complaints against Intel worldwide
and both parties will enter into a new 5-year patent cross license
agreement. In addition, Intel will pay AMD $1.25 billion.
Intel’s fourth-quarter Business Outlook was originally published in the
company’s third- quarter earnings release, available at
The company is scheduled to report its fourth-quarter financial results
on Jan. 14.
Status of Business Outlook
Through Nov. 25, Intel’s corporate representatives may reiterate the
Business Outlook during private meetings with investors, investment
analysts, media and others. From the close of business on Nov. 25 until
publication of the company’s fourth-quarter earnings release, Intel will
observe a “Quiet Period” during which the Business Outlook disclosed in
the company’s news releases and filings with the SEC should be
considered to be 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 document are forward-looking
statements that involve a number of risks and uncertainties. Many
factors could affect Intel’s actual results, and variances from Intel’s
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 the important
factors that could cause actual results to differ materially from the
Demand could be different from Intel's expectations due to factors
including changes in business and economic conditions; customer
acceptance of Intel’s and competitors’ products; changes in customer
order patterns including order cancellations; and changes in the level
of inventory at customers.
Intel operates in intensely competitive industries that are
characterized by a high percentage of costs that are fixed or
difficult to reduce in the short term and product demand that is
highly variable and difficult to forecast. Additionally, Intel is in
the process of transitioning to its next generation of products on
32nm process technology, and there could be execution issues
associated with these changes, including product defects and errata
along with lower than anticipated manufacturing yields. Revenue and
the gross margin percentage are affected by the timing of new Intel
product introductions and the demand for and market acceptance of
Intel's products; actions taken by Intel's competitors, including
product offerings and introductions, marketing programs and pricing
pressures and Intel’s response to such actions; and Intel’s ability to
respond quickly to technological developments and to incorporate new
features into its products.
The gross margin percentage could vary significantly from expectations
based on changes in revenue levels; capacity utilization; start-up
costs, including costs associated with the new 32nm process
technology; variations in inventory valuation, including variations
related to the timing of qualifying products for sale; excess or
obsolete inventory; product mix and pricing; manufacturing yields;
changes in unit costs; impairments of long-lived assets, including
manufacturing, assembly/test and intangible assets; and the timing and
execution of the manufacturing ramp and associated costs.
Expenses, particularly certain marketing and compensation expenses, as
well as restructuring and asset impairment charges, vary depending on
the level of demand for Intel's products and the level of revenue and
The tax rate expectation is based on current tax law and current
expected income. The tax rate 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 realized on the
sale or exchange of securities; gains or losses from equity method
investments; impairment charges related to debt securities as well as
equity and other investments; interest rates; cash balances; and
changes in fair value of derivative instruments.
The majority of our non-marketable equity investment portfolio balance
is concentrated in companies in the flash memory market segment, and
declines in this market segment or changes in management’s plans with
respect to our investments in this market segment could result in
significant impairment charges, impacting restructuring charges as
well as gains/losses on equity investments and interest and other.
Intel's results could be impacted 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 and fluctuations in currency exchange
Intel's results could be affected by adverse effects associated with
product defects and errata (deviations from published specifications),
and by litigation or regulatory matters involving intellectual
property, stockholder, consumer, antitrust and other issues, such as
the litigation and regulatory matters described in Intel's SEC reports.