Intel 2008 Annual Report Download - page 36

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Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (Continued)
The strategy for our Digital Health Group is to design and deliver technology-enabled products and explore global business
opportunities in healthcare information technology and healthcare research, as well as personal healthcare. In support of this
strategy, we are focusing on the design of technology solutions and platforms for the digital hospital and consumer/home
health products.
The strategy for our Software and Services Group is to promote Intel architecture as the platform of choice for software and
services. SSG works with the worldwide software and services ecosystem by providing software products, engaging with
developers, and driving strategic software investments.
Critical Accounting Estimates
The methods, estimates, and judgments that we use in applying our accounting policies have a significant impact on the results
that we report in our financial statements. Some of our accounting policies require us to make difficult and subjective
judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain. Our most critical
accounting estimates include:
Below, we discuss these policies further, as well as the estimates and judgments involved. We also have other policies that we
consider key accounting policies, such as those for revenue recognition, including the deferral of revenue on sales to
distributors; however, these policies typically do not require us to make estimates or judgments that are difficult or subjective.
Non
-Marketable Equity Investments
The carrying value of our non-marketable equity investment portfolio, excluding equity derivatives, totaled $4.1 billion as of
December 27, 2008 ($3.4 billion as of December 29, 2007). The majority of the balance as of December 27, 2008 was
concentrated in companies in the flash memory market segment and wireless connectivity market segment. Our flash memory
market segment investments include our investment in IMFT of $1.7 billion ($2.2 billion as of December 29, 2007), our
investment in IM Flash Singapore, LLP (IMFS) of $329 million ($146 million as of December 29, 2007), and our investment
in Numonyx of $484 million. Our wireless connectivity market segment investments include our non-marketable investment
in Clearwire LLC of $238 million (see “Note 5: Available-for-Sale Investments” in Part II, Item 8 of this Form 10-K for
information on our additional marketable equity investment in the new Clearwire Corporation of $148 million). In addition,
we regularly invest in non-marketable equity instruments of private companies, which range from early-stage companies that
are often still defining their strategic direction to more mature companies with established revenue streams and business
models. For additional information, see “Note 6: Equity Method and Cost Method Investments” in Part II, Item 8 of this
Form 10-K.
Our non-marketable equity investments are recorded using adjusted historical cost basis or the equity method of accounting,
depending on the facts and circumstances of each investment (see “Note 2: Accounting Policies” in Part II, Item 8 of this
Form 10-K). Our non-marketable equity investments are classified in other long-term assets on the consolidated balance
sheets.
31
• the valuation of non-marketable equity investments and the determination of other-than-
temporary impairments, which
impact gains (losses) on equity method investments, net, or gains (losses) on other equity investments, net when we
record impairments;
• the valuation of investments in debt instruments and the determination of other-than-temporary impairments, which
impact our investment portfolio balance when we assess fair value, and interest and other, net when we record
impairments of
available
-
for
-
sale
debt instruments;
• the assessment of recoverability of long-lived assets, which primarily impacts gross margin or operating expenses
when we record asset impairments or accelerate their depreciation;
• the recognition and measurement of current and deferred income taxes (including the measurement of uncertain tax
positions), which impact our provision for taxes; and
•
the valuation of inventory, which impacts gross margin.