Intel's Data Strategy: The Virtuous Cycle of Growth

Intel's Data Strategy: The Virtuous Cycle of Growth

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Description: This presentation contains non-GAAP financial measures relating to our performance. You can find the reconciliation of these measures to the most directly comparable GAAP financial measure in the Appendix at the end of this presentation. The non-GAAP financial measures disclosed by Intel should not be considered a substitute for, or superior to, the financial measures prepared in accordance with GAAP.

Please refer to “Explanation of Non-GAAP Measures” in Intel's quarterly earnings release for a detailed explanation of the adjustments made to the comparable GAAP measures, the ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures provide investors with useful supplemental information.

 
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Contents:
Brian Krzanich

Chief Executive Officer

Disclosures
This presentation contains non-GAAP financial measures relating to our performance. You can find the reconciliation of
these measures to the most directly comparable GAAP financial measure in the Appendix at the end of this presentation.
The non-GAAP financial measures disclosed by Intel should not be considered a substitute for, or superior to, the
financial measures prepared in accordance with GAAP. Please refer to “Explanation of Non-GAAP Measures” in Intel's
quarterly earnings release for a detailed explanation of the adjustments made to the comparable GAAP measures, the
ways management uses the non-GAAP measures, and the reasons why management believes the non-GAAP measures
provide investors with useful supplemental information.
Statements in this presentation that refer to Business Outlook, forecast, future plans and expectations are forwardlooking statements that involve a number of risks and uncertainties. Words such as "anticipates," "expects," "intends,"
"goals," "plans," "believes," "seeks," "estimates," "continues," "may," "will," “would,” "should," “could,” 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. Such statements are
based on management's expectations as of February 9, 2017 and involve many risks and uncertainties that could cause
actual results to differ materially from those expressed or implied in these forward-looking statements. Important factors
that could cause actual results to differ materially from the company's expectations are set in Intel's earnings release
dated January 26, 2017, which is included as an exhibit to Intel’s Form 8-K furnished to the SEC on such date. Additional
information regarding these and other factors that could affect Intel's results is included in Intel's SEC filings, including
the company's most recent reports on Forms 10-K and 10-Q. Copies of Intel's Form 10-K, 10-Q and 8-K reports may be
obtained by visiting our Investor Relations website at www.intc.com or the SEC's website at www.sec.gov.
3

Agenda
2016 Results

DATA: Driving Growth & Innovation
Intel’s Strategy
4

Agenda
2016 Results

5

2016 Financial Results (non-gaap)
revenue

gross margin

EPS

$59.5B

63.2%

$2.72

6
The results above are presented on a non-GAAP basis. Refer to the Appendix for a reconciliation of these non-GAAP measures.

3 YEAR SHAREHOLDER RETURN
%

INTC
S&P
DOW
Portfolio

3 Year 1 Year
(Graph)

Intel

56%

6%

Dow 30

30%

13%

S&P 100

32%

10%

0

3 YEAR SHAREHOLDER RETURN

Years

As of 12/30/2016

7
Source: Factset. TSR was calculated as of the stock price end of day 12/30/16 (INTC stock price was $36.60).

CCG
Banner Year

in Client
8

DCG

Data Center
group
9

IOTG

Internet of
things group
10

PSG

Programmable
Solutions Group
11

NSG

Non-Volatile Memory

Solutions Group
12

NTG

New Technology
Group
13

2016: A Year of Transformation
Executive leadership changes

Restructuring and Reinvestment
focusing our salesforce
14

Agenda

DATA: Driving Growth & Innovation

15

Data:

Driving Growth
and Innovation
16

By 2020
Avg.
internet user 1.5 GB of traffic / Day
Autonomous
vehicles 4 TB of data / Day
CONNECTED
AIRPLANE 5 TB of data / Day
Smart
Factory 1 PB of Data / Day
Cloud
video Providers 750 pB of video / Day

The Coming
Flood of Data

17
Source: Amalgamation of analyst data and Intel analysis.

We are a
Data Company

18

Agenda

Intel’s Strategy
19

Intel’s Data Strategy:

Virtuous Cycle

of Growth
20

A traditional market view

Intel traditional market segment 2016 Si TAM ($B)

~$13B

2016 Revenue $

~$32B

Total Tam

~$45B
0

PC CPU Server CPU

(x86 compute)

(x86 compute)

21
Source: 2016 Intel Revenue is based on Intel financials. 2016 Si TAM is based on amalgamation of analyst data and Intel analysis.
PC and Server include CPU and Chipsets revenue.

A broader market SEGMENT view
2021 Si TAM ($B)

~$65B

~$55B

~$40B

~$30B

2016 Revenue $

~$30B

Total Tam

~$220B
PC CPU
22

Data center

Non-volatile
Memory

Mobile

IoT

Source: 2016 Intel Revenue is based on Intel financials. 2021F Si TAM is based on amalgamation of analyst data and Intel analysis, based upon current expectations and available information and are subject to
change without notice. PC CPU includes CPU and Chipsets. Data Center includes Server, Storage, & Network computing, Ethernet/OPA, Silicon Photonics and Memory.
Non-Volatile Memory includes NAND and 3D XPoint™ technology. Mobile includes Phone and Tablet compute and Modems. IOT includes 32bit and above addressable compute.

A broader market segment view
2021 Si TAM ($B)

2016 Revenue $

~$30B

~$65B

~$55B

~$40B

~$30B

Premium
modem

ADAS
Industrial
Video
Retail

Mobile

IoT

Networking
3d xpointTM
Technology
Segmentation

SI Photonics
Intel® Omni-path

PC CPU

Data center

23

Intel® OPTANE™
technology

3D NAND

Non-volatile
Memory

Total Tam

~$220B

Source: 2016 Intel Revenue is based on Intel financials. 2021F Si TAM is based on amalgamation of analyst data and Intel analysis, based upon current expectations and available information and are subject to
change without notice. PC CPU includes CPU and Chipsets. Data Center includes Server, Storage, & Network computing, Ethernet/OPA, Silicon Photonics and Memory.
Non-Volatile Memory includes NAND and 3D XPoint™ technology. Mobile includes Phone and Tablet compute and Modems. IOT includes 32bit and above addressable compute.

Investment Priorities
Cloud, ARTIFICIAL INTELLIGENCE & Network
memory, fpgas & 5G
Data-rich Things & Devices
24

Intel’s Strategy:
Cloud, AI & Network
cloud

25

AI

Network

Intel’s Strategy:
Memory, FPGAs & 5G
Intel® Optane™
Technology

26

FPGA

5G

Intel’s Strategy:
Data-rich Things & Devices
EDGE devices

27

Retail

ADAS

Intel’s Strategy:

How We Win

Right Market, Right Timing
Domain Expertise
Partnerships & M&A
End-to-End Solutions
Si and SW Leadership
28

Top Priorities for 2017
Growth in Data
Center & Adjacencies

29

strong & healthy
Client business

growth
in IoT & devices

flawlessly execute in
Memory & FPGAS

Rob Crooke

Diane Bryant
Dan McNamara

Non-Volatile Memory
Solutions Group

Data Center
Group

Wendell Brooks

Doug Davis
Automated
Driving Group

Ann Kelleher

Technology and
Manufacturing Group

Richard Taylor
Human Resources

Leslie Culbertson Mike Mayberry
Human Resources

Intel Labs

Chris Young

Intel Security Group

Venkata Renduchintala Doug Fisher

Brian Krzanich

Chief Executive Officer

Bob Swan

Chief Financial
Officer

30

Joshua Walden
New Technology
Group

Sohail U. Ahmed
Technology and
Manufacturing Group

Intel Capital &
Programmable Solutions Strategic Transactions
Group
Group

Amir Faintuch

Platform Engineering
Group

Stacy Smith

Sales, Manufacturing
and Operations

Client & Internet of Things
Software and
Businesses & Systems Architecture Services Group
Group

Navin Shenoy

Client Computing Group

Steve Rodgers
Law & Policy Group

Greg Pearson
Sales and
Marketing Group

Tom Lantzsch
Internet of Things
Group

Steven Fund

Global Marketing
& Communications

Paula Tolliver

Aicha Evans

Communication
and Devices Group

Information Technology

Appendix

32

Appendix: 2016 Non-GAAP Reconciliation
Twelve Months Ended

Twelve Months Ended

Deferred revenue write-down

Dec 31, 2016
$59,387
99

Deferred revenue write-down, net of cost of sales

Dec 31, 2016
$10,316
64

NON-GAAP NET REVENUE

$59,486

Inventory valuation

387

Amortization of acquisition-related intangibles

1,231
1,886

($ in Millions, except per share amounts)
GAAP NET REVENUE

GAAP NET INCOME

GAAP GROSS MARGIN PERCENTAGE

60.90%

Restructuring and other charges

Deferred revenue write-down, net of cost of sales

—%

Other acquisition-related charges

100

Inventory valuation

0.70%

Income tax effect

(745)

Amortization of acquisition-related intangibles

1.60%
63.20%

NON-GAAP NET INCOME

$13,239

GAAP DILUTED EARNINGS PER COMMON SHARE

$2.12

NON-GAAP GROSS MARGIN PERCENTAGE

GAAP OPERATING INCOME
Deferred revenue write-down, net of cost of sales
Inventory valuation
Amortization of acquisition-related intangibles
Restructuring and other charges
Other acquisition-related charges
NON-GAAP OPERATING INCOME

$12,874
64
387
1,231
1,886
100
$16,542

Deferred revenue write-down, net of cost of sales
Inventory valuation
Amortization of acquisition-related intangibles
Restructuring and other charges
Other acquisition-related charges
Income tax effect
NON-GAAP DILUTED EARNINGS PER COMMON SHARE

0.01
0.08
0.25
0.39
0.02
(0.15)
$2.72