Intel 2008 Annual Report Download - page 22

Table of Contents
We operate in intensely competitive industries, and our failure to respond quickly to technological developments and
incorporate new features into our products could harm our ability to compete.
We operate in intensely competitive industries that experience rapid technological developments, changes in industry
standards, changes in customer requirements, and frequent new product introductions and improvements. If we are unable to
respond quickly and successfully to these developments, we may lose our competitive position, and our products or
technologies may become uncompetitive or obsolete. To compete successfully, we must maintain a successful R&D effort,
develop new products and production processes, and improve our existing products and processes at the same pace or ahead of
our competitors. We may not be able to develop and market these new products successfully, the products we invest in and
develop may not be well received by customers, and products developed and new technologies offered by others may affect
demand for our products. These types of events could have a variety of negative effects on our competitive position and our
financial results, such as reducing our revenue, increasing our costs, lowering our gross margin percentage, and requiring us to
recognize impairments on our assets.
We may be subject to litigation proceedings that could harm our business.
We may be subject to legal claims or regulatory matters involving stockholder, consumer, competition, and other issues on a
global basis. As described in “Note 24: Contingencies” in Part II, Item 8 of this Form 10-K, we are currently engaged in a
number of litigation matters, particularly with respect to competition. Litigation is subject to inherent uncertainties, and
unfavorable rulings could occur. An unfavorable ruling could include monetary damages or, in cases for which injunctive
relief is sought, an injunction prohibiting us from manufacturing or selling one or more products. If we were to receive an
unfavorable ruling in a matter, our business and results of operations could be materially harmed.
We invest in companies for strategic reasons and may not realize a return on our investments.
We make investments in companies around the world to further our strategic objectives and support our key business
initiatives. Such investments include equity or debt instruments of public or private companies, and many of these instruments
are non-marketable at the time of our initial investment. These companies range from early-stage companies that are often still
defining their strategic direction to more mature companies with established revenue streams and business models. The
success of these companies is dependent on product development, market acceptance, operational efficiency, and other key
business factors. The companies in which we invest may fail because they may not be able to secure additional funding, obtain
favorable investment terms for future financings, or take advantage of liquidity events such as public offerings, mergers, and
private sales. The current economic environment may increase the risk of failure for many of the companies in which we
invest due to limited access to credit and reduced frequency of liquidity events. If any of these private companies fail, we
could lose all or part of our investment in that company. If we determine that an other-than-temporary decline in the fair value
exists for an equity investment in a public or private company in which we have invested, we write down the investment to its
fair value and recognize the related write-down as an investment loss. The majority of our non-marketable equity investment
portfolio balance is concentrated in companies in the flash memory market segment and wireless connectivity market segment,
and declines in these market segments or changes in management’s plans with respect to our investments in these market
segments could result in significant impairment charges, impacting gains/losses on equity method investments and gains/losses
on other equity investments.
Furthermore, when the strategic objectives of an investment have been achieved, or if the investment or business diverges
from our strategic objectives, we may decide to dispose of the investment. Our non-marketable equity investments in private
companies are not liquid, and we may not be able to dispose of these investments on favorable terms or at all. The occurrence
of any of these events could harm our results of operations. Additionally, for cases in which we are required under equity
method accounting to recognize a proportionate share of another company’s income or loss, such income and loss may impact
our earnings. Gains or losses from equity securities could vary from expectations depending on gains or losses realized on the
sale or exchange of securities, gains or losses from equity method investments, and impairment charges related to debt
instruments as well as equity and other investments.
Our results of operations could vary as a result of the methods, estimates, and judgments that we use in applying our
accounting policies.
The methods, estimates, and judgments that we use in applying our accounting policies have a significant impact on our results
of operations (see “Critical Accounting Estimates” in Part II, Item 7 of this Form 10-K). Such methods, estimates, and
judgments are, by their nature, subject to substantial risks, uncertainties, and assumptions, and factors may arise over time that
lead us to change our methods, estimates, and judgments. Changes in those methods, estimates, and judgments could
significantly affect our results of operations. The current volatility in the financial markets and overall economic uncertainty
increase the risk that the actual amounts realized in the future on our debt and equity investments will differ significantly from
the fair values currently assigned to them.
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