Adaptec 2010 Annual Report Download - page 32

The following discussion of the financial condition and results of our operations should be read in conjunction with the
consolidated financial statements and notes thereto included elsewhere in this Annual Report.
O VERVIEW
We generate revenues from the sale of semiconductor solutions that we have designed and developed or acquired. Almost all of
our revenues in any given year come from the sale of semiconductors that are developed prior to that year. For example, 100% of our
revenues in 2010 came from products developed or acquired in 2009 and earlier. After an individual product is released for
production and announced it may take several years before that product generates any significant revenues.
Our current revenues are generated by a portfolio of approximately 730 products which we have designed and developed, or
acquired. PMC’s diverse product portfolio enables many different types of communications network infrastructure equipment. Our
Enterprise Storage products enable high-speed communication servers, switches and storage devices to store, manage and move large
quantities of data securely. Moving beyond data centers, our Fiber Access products are used to send data from residences and
businesses to carrier back offices over fibre optic networks. Our Wireless Access solutions are used in wireless base stations, mobile
backhaul, and aggregation equipment. Our Metro networking products are used in optical transport platforms, multi-services
provisioning platforms, and edge routers where they gather, process and transmit disparate traffic to their next destination in the
network. Our Printer and Enterprise Networking provide integrated solutions for laser printers, switches, and routers that are used by
enterprises and small businesses to manage their data.
We invest a substantial amount every year for the research and development of new semiconductor solutions. We determine the
amount to invest in each semiconductor development based on our assessment of the future market opportunities for those
components and the estimated return on investment. To compete globally, we must invest in technologies, products and businesses
that are both growing in demand and are cost competitive in the geographic markets that we serve. Going forward, we plan to
continue to focus on finding innovative solutions to meet our customers’ needs while maintaining our operational efficiencies.
On June 8, 2010, we completed the acquisition of the Channel Storage business from Adaptec. The Channel Storage business
includes Adaptec’s RAID storage product line, a well-established global value added reseller customer base, and leading SSD cache
performance solutions. We purchased the Channel Storage business from Adaptec because of its strategic and product fit with our
existing enterprise storage products and its growth potential in the storage channel market segment.
With regard to our communications business, we continue to see the convergence of networks and build-outs by service
providers who need to handle increasing levels of data and video traffic, as well as reduce their network operating costs. We are
seeing growth in demand for our wireline and wireless access product, as well as our metro optical transport solutions.
On November 18, 2010, we completed the acquisition of Wintegra, a provider of highly integrated network processors
optimized for mobile backhaul for 3G and 4G wireless and wireline broadband networks. The acquisition accelerates PMC’s product
offering in IP/Ethernet packet-based mobile backhaul equipment and fits strategically with its overall efforts to accelerate the
transition of existing communications equipment to converged, packet-centric solutions.
We expect our microprocessor solutions to continue to ship into the laser printer market as well as the enterprise networking
market.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.