Intel Corporation (NASDAQ:INTC) Q2 2019 Earnings Conference Call - Final Transcript

Jul 25, 2019 • 05:00 pm ET


Intel Corporation (NASDAQ:INTC) Q2 2019 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to the Second Quarter 2019 Intel Corporation Earnings Conference Call. [Operator Instructions]. And now I'd like to introduce your host for today's program, Mark Henninger, Head of Investor Relations. Please go ahead, sir.

Mark Henninger

Thank you, operator, and welcome everyone to Intel's second quarter earnings conference call. By now you should have received a copy of our earnings release and the earnings presentation. If you've not received both documents, they're available on our Investor website The earnings presentation is also available in the webcast window for those joining us online.

I'm joined today by our CEO, Bob Swan; and our CFO, George Davis. In a moment, we'll hear brief remarks from both of them, followed by Q&A.

Before we begin, 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. A brief reminder that this quarter we have provided both GAAP and non-GAAP financial measures. Today we will be speaking to the non-GAAP financial measures when describing our consolidated results. The earnings presentation and earnings release available on include the full GAAP and non-GAAP reconciliations.

With that, let me hand it over to Bob.

Robert H. Swan

Thanks, Mark. The second quarter was significantly stronger than we forecasted in April and our results demonstrated our customers' preference for the performance of Intel XTUs as workloads grow, diversify and become increasingly complex. That need for performance manifested in strong mix and ASPs across the business. Our Q2 results are proof points for the mega-trends that underpin our strategy. The world's insatiable appetite for data is driving demand for solutions to process, store and move it faster and better.

Customers want to work with partners who can deliver performance and platforms to address their most important technology challenges. Our data-centric businesses overall performed roughly in line within our April expectations. Data center and IOTG customers chose our highest performing products, leading to strong mix in ASPs. While our cloud customers absorbed capacity they put in place over the last year, we continue to expect cloud demand to improve in the second half.

Enterprise and government spending remains weak, however, particularly in China. PC demand continued to improve, particularly in the commercial segment. We now expect the PC TAM to be up slightly for the full year. Strong demand for our highest performing products and the productivity and TCO gains they deliver continued.

Mix was stronger than we anticipated. While small core supply improved, we were not able to fully satisfy customer demand for these SKUs in the second quarter. Tariff and trade uncertainties created anxiety across our customer supply chains and drove a pull-in of client CPU orders into the second quarter. We also halted shipments to certain customers in response to the US government's revised entity list.