Intel 2006 Annual Report Download - page 58

Table of Contents
As of December 30, 2006, the fair value of our portfolio of marketable strategic equity investments and equity derivative
instruments, including hedging positions, was $427 million ($574 million as of December 31, 2005). To assess the market
price sensitivity of these equity securities, we analyzed the historical movements over the past several years of high-
technology stock indices that we considered appropriate. However, our marketable strategic equity portfolio is substantially
concentrated in one company as of December 30, 2006, which will affect the portfolio’s price volatility. We currently have an
investment in Micron with a fair value of $236 million at December 30, 2006, or 55% of the total marketable strategic equity
portfolio value including equity derivative instruments. During 2006, we sold a portion of our investment in Micron. Based on
the analysis of the high-technology stock indices and the historical volatility of Micron’s stock, we estimated that it was
reasonably possible that the prices of the stocks in our marketable strategic equity portfolio could experience a loss of 30% in
the near term (40% as of December 31, 2005). This estimate is not necessarily indicative of future performance, and actual
results may differ materially.
Assuming a loss of 30% in market prices, and after reflecting the impact of hedges and offsetting positions, our marketable
strategic equity portfolio could decrease in value by approximately $134 million, based on the value of the portfolio as of
December 30, 2006 (a decrease in value of approximately $245 million, based on the value of the portfolio as of December 31,
2005 using an assumed loss of 40%).
Our strategic investments in non-marketable equity securities are affected by many of the same factors that could result in an
adverse movement of equity market prices, although the impact cannot be directly quantified. Such a movement and the
underlying economic conditions would negatively affect the prospects of the companies we invest in, their ability to raise
additional capital, and the likelihood of our being able to realize our investments through liquidity events such as initial public
offerings, mergers, or private sales. These types of investments involve a great deal of risk, and there can be no assurance that
any specific company will grow or become successful; consequently, we could lose all or part of our investment. At December
30, 2006, our strategic investments in non-marketable equity securities had a carrying amount of $2.8 billion ($561 million as
of December 31, 2005). The carrying amount of these investments approximated fair value as of December 30, 2006 and
December 31, 2005. As of December 30, 2006, our non-marketable equity securities portfolio was concentrated in two
companies: IMFT and Clearwire. IMFT is a manufacturer of NAND flash memory, with a carrying amount of $1.3 billion, or
46% of the total value of the non-marketable equity securities portfolio at December 30, 2006. See “Note 17: Venture” in Part
II, Item 8 of this Form 10-K. The terms of our investment in IMFT contain contractual conditions that restrict our ability to
sell the investment. Clearwire builds and operates next-generation wireless broadband networks. Our investment has a
carrying amount of $613 million, or 22% of the total value of the non-marketable equity securities portfolio at December 30,
2006. See “Note 7: Investments” in Part II, Item 8 of this Form 10-K.
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