Adaptec 2011 Annual Report Download - page 31

Table of Contents
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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.
OVERVIEW
PMC-Sierra is a semiconductor innovator transforming networks that connect, move and store digital content. 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 2011 came from products developed or acquired in 2010 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 640 products which we have designed and developed, or acquired.
PMC's diverse product portfolio enables many different types of communications network infrastructure equipment in three market segments: Storage,
Mobile and Optical networks.
1. Our Storage products enable high-speed communication servers, switches and storage devices to store, manage and move large quantities of data
securely;
2. Our Mobile products are used in wireless base stations, mobile backhaul, and aggregation equipment; and
3. Our Optical 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.
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.
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 net work operating costs. We are seeing growth in demand for our wireline and wireless access products, as well as our metro optical
transport solutions.
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.
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.
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