Assessment of the Intel Corporation budget

¶ … Intel Corporation Budget

Assessment of the Intel Corporation's Budget

The Intel Corporation celebrates four decades of successful operations this year. The company activates in the semiconductors industry and it is its undisputable leader. Since the organization is a private one, their detailed budgets are withheld from the public; however, the reader can form an opinion by studying the available materials.

Company Description

The Intel Corporation was founded in 1968 and it is currently headquartered in Santa Clara, California. The organization operates in the semiconductors industry and it is the undisputed international leader of the industry. However they produce various items, such as mother boards, memory sticks, chipsets or Bluetooth applications, the primary item is the microprocessor, most commonly found in the personal computers. The company is focused on developing high quality items that integrate the latest technological advancements. "Intel Corporation is a semiconductor chipmaker, supplying advanced technology solutions for the computing and communications industries" (CBR, 2008).

In conducting operations, the organization emphasizes on three major players, all of which are vital to achieving corporate success. These parties are the Intel employees, the Intel shareholders and finally, the Intel customers. The company's mission is to "delight our customers, employees, and shareholders by relentlessly delivering the platform and technology advancements that become essential to the way we work and live. (Their values are) customer orientation, results orientation, risk taking, great place to work, quality and discipline. (Intel's objectives are to) extend our silicon technology and manufacturing leadership, deliver unrivaled microprocessors and platforms, grow profitability worldwide and excel in customer orientation" (Official Website of the Intel Corporation, 2008).

3. Intel Employees

In December 2005, the total number of Intel employees was estimated at around 99,000 individuals worldwide. By December 2006, the numbers had fallen to 94,100 employees, to further decrease to 86,300 employees in December 2007. Out of these, more than 50% are located within the United States. The reduction in staff members was due to a restructuring plan that was aimed at reducing costs. The restructuring plan took three years to finalize and in 2006, the company had registered $555,000,000 with employee severance and benefit arrangements; in 2007, the numbers had decreased to $516,000,000. The estimated gain from the restructuring plan is of $1 billion, and the company has begun to feel the savings since the third quarter of fiscal year ended in December 2006 (Intel 2007 Annual Report).

However the wages and bonuses offered to Intel employees are generally confidential, the website for career information Vault, managed to retrieve some information on the salaries at Intel. In this order of ideas, the list below contains the position occupied and the base wage realized per annum:

Senior design engineer - $84,000

Project manager - $100,000

System engineer - $85,370

Finance intern - $44,600

Business analyst - $60,000

Maintenance technician - $79,000

Component design engineer - $58,000

Process engineer - $72,000

Software engineer - $90,000

Research scientist - $100,000

Design researcher - $72,000

Marketing manager - $110,000 (Vault, 2008)

The company officials have understood the need to be a competitive employer and to maintain this status, they offer various incentives and benefits, a primary one being the ability to purchase corporate stocks (at a price 15% lower than the traded value). As of 2007, 75% of the Intel employees were stock owners and the value of the shares was of $428 million; $38 million were withheld by the company for adherent tax payment (Intel 2007 Annual Report). This strategy increases employee motivation but also ensures the employer of the staff's high efforts.

4. Intel Budget

As of December 2007, Intel's sales revenues had grown to $38,334 million, with the exception of 2006, revealing an ascendant trend. The financial highlights of the past five years are presented below:

Source: Intel 2007 Annual Report

The increasing revenues registered by the semiconductor organization, in the background of general economic difficulties and a reduction in staff, only reveal a strong company, with a well defined budget and a capability to efficiently operate.

Source: Intel 2007 Annual Report

However the company's budgets are undisclosed to the general public, Intel emphasizes on the increasing value of the R&D Department. For instance, a decade ago, this budget had a value of $2.5 million; by 2008, the value had more than doubled, reaching $5.8 million

Source: Intel 2007 Annual Report

The process of budget planning within Intel is briefly explained in the following quotation. "The company's budget and planning process commences with a segment-level evaluation - which as noted above excludes share-based compensation - and culminates with the preparation of a consolidated annual and/or quarterly budget that includes these non-GAAP financial measures (gross margin, research and development expenses, marketing, general and administrative expenses, operating income, income tax expense, net income and EPS). This budget, once finalized and approved, serves as the basis for allocation of resources and management of operations. While share-based compensation is a significant expense affecting the company's results of operations, management excludes share-based compensation from the company's consolidated budget and planning process to facilitate period to period comparisons and to assess changes in gross margin dollar, net income and earnings per share targets in relation to changes in forecast revenue" (Edgar Online, 1995-2008).