Intel 2006 Annual Report Download - page 36

Table of Contents
We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) by discussing
Intel’s overall strategy and the strategy for our major operating segments to give the reader an overview of the goals of our
business and the direction in which our business and products are moving. The “Strategy” section is followed by a discussion
of the “Critical Accounting Estimates” that we believe are important to understanding the assumptions and judgments
incorporated in our reported financial results. We then discuss our “Results of Operations” beginning with an “Overview,”
followed by a comparison of 2006 to 2005, and 2005 to 2004. Following the analysis of our results, we provide an analysis of
changes in our balance sheets and cash flows, and discuss our financial condition in the section entitled “Liquidity and Capital
Resources” followed by a discussion of our “Contractual Obligations,” “Off-Balance-Sheet Arrangements,” and “Equity
Incentive Plans.” We then conclude this MD&A with our “Business Outlook” section, discussing our outlook for 2007.
This MD&A should be read in conjunction with the other sections of this Form 10-K, including Part I, “Item 1: Business”;
Part II, “Item 6: Selected Financial Data”; and Part II, “Item 8: Financial Statements and Supplementary Data.” The various
sections of this MD&A contain a number of forward-looking statements. Words such as “expects,” “goals,” “plans,”
“believes,” “continues,” “may,” and variations of such words and similar expressions are intended to identify such forward-
looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated
growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking
statements. Such statements are based on our current expectations and could be affected by the uncertainties and risk factors
described throughout this filing and particularly in the “Business Outlook” section (see also “Risk Factors” in Part I, Item 1A
of this Form 10-K). Our actual results may differ materially, and these forward-looking statements do not reflect the potential
impact of any divestitures, mergers, acquisitions, or other business combinations that had not been completed as of February
21, 2007.
Strategy
Our goal is to be the preeminent provider of semiconductor chips and platform solutions to the worldwide digital economy. As
part of our overall strategy to compete in each relevant market segment, we use our core competencies in the design and
manufacture of integrated circuits, as well as our financial resources, global presence, and brand recognition.
Our strategy focuses on taking customer needs into account in developing the next generation of products and platforms that
will enable new form factors and new usage models for businesses and consumers. We believe that end users, OEMs, third-
party vendors, and service providers of computing and communications systems and devices want platform products. We
define a platform as a collection of technologies that are designed to work together to provide a better end-
user solution than if
the ingredients were used separately. Our platforms consist of various products based on standards and initiatives; hardware
and software that may include technologies such as HT Technology, Intel VT, and Intel AMT; and services. In developing our
platforms, we may include ingredients sold by other companies. The success of our strategy to offer platform solutions is
dependent on our ability to select and incorporate ingredients that customers value, and to market the platforms effectively.
We have a tiered brand strategy that addresses our customer needs within various market price points.
We also believe that users of computing and communications systems and devices want improved overall performance
and/or improved energy-efficient performance. Improved overall performance can include faster processing performance and
other improved capabilities such as multithreading and multitasking. Performance can also be improved through enhanced
connectivity, security, manageability, utilization, reliability, ease of use, and interoperability among devices. Improved
energy-efficient performance involves balancing the addition of these types of improved performance factors with the power
consumption of the platform. Lower power consumption may reduce system heat output, provide power savings, and reduce
the total cost of ownership for the end user. It is our goal to incorporate these improvements in our various products and
platforms to meet end-user demands. In line with these efforts, we are focusing on further development of multi-core
microprocessors. Multi-core microprocessors contain two or more processor cores, which enable improved multitasking and
energy-efficient performance. Our strategy for developing processors with improved performance is to synchronize the
introduction of new microarchitecture with improvements in silicon process technology. We plan to introduce a new
microarchitecture approximately every two years and ramp the next generation of silicon process technology in the intervening
years. This coordinated schedule allows us to develop and introduce new products based on a common microarchitecture
quickly, without waiting for the next generation of silicon process technology.
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ITEM 7.
MANAGEMENT
’
S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS