Intel 2004 Annual Report Download - page 28

Table of Contents
We begin Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) with Intel’s overall
strategy and the strategy for our major business units, 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. Beginning on page 30, we discuss our
Results of Operations for 2004 compared to 2003, and for 2003 compared to 2002, beginning with an Overview. We then provide an analysis
of changes in our balance sheet and cash flows, and discuss our financial commitments in the sections entitled “Financial Condition,”
“Contractual Obligations” and “Off-Balance-Sheet Arrangements.” On page 40, we conclude this MD&A with our “Business Outlook”
section,
discussing our outlook for 2005.
This MD&A should be read in conjunction with the other sections of this annual report on 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, all of which 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. 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 16, 2005.
Strategy
Our goal is to be the preeminent building block supplier 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 and our financial resources,
as well as our global presence and brand recognition. Our global marketing strategy is designed to associate our brands with advanced
technology and innovation. In addition, under our Intel Capital program, we make equity investments in companies around the world to further
our strategic objectives and support our key business initiatives.
Our primary focus is on developing advanced integrated silicon technology solutions, which we believe will provide the performance
necessary to help accelerate the convergence of computing and communications capabilities with digital content. Convergence refers to
combining computing and communications capabilities in an integrated product solution. We believe that convergence is occurring primarily in
three areas: the digital home, the digital enterprise and with mobile Internet users. We also provide key components for networking and
communications infrastructures used to connect technology users.
We believe that users of computing and communications devices want improved performance, which includes faster processing
performance and/or improved capabilities such as multithreading or multitasking, lower system power consumption, seamless connectivity,
improved security, reliability, ease of use and interoperability among devices. It is our goal to incorporate features addressing these capabilities
in our various products to meet user demands. We also believe that our customers who build computing and communications systems and
devices will benefit if our products incorporating these capabilities are based on a platform solution. We define a platform as a collection of
silicon components and software designed to provide a better user solution when used in combination than if used separately. The success of
our strategies to add more features to our microprocessors and offer platform solutions is dependent on our ability to select and incorporate
features that customers value, and to market those features effectively.
We view technology standards as an important way to advance new technologies and foster industry infrastructures or ecosystems. We
work with the industry in various areas to help establish technology standards, ultimately incorporating many of these standards into our own
product offerings.
As we move to each succeeding generation of manufacturing process technology, we use less space per transistor, which enables us to fit
more transistors on an equivalent size chip, decrease the size of the chip or offer an increased number of integrated features. This decrease in
size can also result in faster microprocessors and semiconductor products that consume less power and/or products that cost less to
manufacture.
Under our Intel Capital program, we make equity investments in companies around the world to further our strategic objectives and
support our key business initiatives. The Intel Capital program generally focuses on investing in companies and initiatives to stimulate growth
in the digital economy, create new business opportunities for Intel and expand global markets for our products. The investments may support,
among other things, Intel product initiatives, emerging trends in the technology industry or worldwide Internet deployment. We invest in
companies that develop software, hardware or services supporting our technologies. Our current investment focus areas include enabling
mobile wireless devices, helping to advance the digital home, enhancing the digital enterprise, advancing high-performance communications
infrastructures and developing the next generation of silicon production technologies. Our focus areas tend to develop and change over time
due to rapid advancements in technology.
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ITEM 7.
MANAGEMENT
’
S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS