Intel 2013 Annual Report Download - page 42

37
Net revenue for the Other IA operating segments decreased by $627 million, or 13%, in 2012 compared to 2011.
The decrease was primarily due to lower netbook platform unit sales and lower Multi-Comm average selling prices.
To a lesser extent, lower netbook platform average selling prices contributed to the decrease. These decreases
were partially offset by higher ISG platform average selling prices.
Operating results for the Other IA operating segments decreased by $800 million from an operating loss of $577
million in 2011 to an operating loss of $1.4 billion in 2012. The decline in operating results was primarily due to
lower netbook revenue and higher operating expenses in the Other IA operating segments. To a lesser extent, lower
Multi-Comm revenue contributed to the decrease.
Software and Services Operating Segments
The revenue and operating income (loss) for the SSG operating segments, including McAfee, the Wind River
Software Group, and the Software and Services Group, for each period were as follows:
(In Millions) 2013 2012 2011
Net revenue $ 2,502 $ 2,381 $ 1,870
Operating income (loss) $ 1 $ (11) $ (32)
Net revenue for the SSG operating segments increased by $121 million in 2013 compared to 2012. The increase
was primarily driven by higher McAfee revenue.
The operating results for the SSG operating segments increased by $12 million in 2013 compared to 2012. The
increase was primarily driven by higher McAfee revenue, partially offset by higher McAfee operating expenses.
Net revenue for the SSG operating segments increased by $511 million in 2012 compared to 2011. The increase
was primarily due to two months of incremental revenue from McAfee of $469 million. McAfee was acquired on
February 28, 2011.
The operating results for the SSG operating segments increased by $21 million in 2012 compared to 2011. The
increase was primarily due to higher McAfee revenue, partially offset by higher McAfee operating expenses.
Operating Expenses
Operating expenses for each period were as follows:
(Dollars In Millions) 2013 2012 2011
Research and development (R&D) $ 10,611 $ 10,148 $ 8,350
Marketing, general and administrative (MG&A) $ 8,088 $ 8,057 $ 7,670
R&D and MG&A as percentage of net revenue 35% 34% 30%
Restructuring and asset impairment charges $ 240 $ — $ —
Amortization of acquisition-related intangibles $ 291 $ 308 $ 260
Research and Development. R&D spending increased by $463 million, or 5%, in 2013 compared to 2012. The
increase was driven by higher investments in our products, primarily smartphones and tablets, as well higher
compensation expenses due to annual salary increases. This increase was partially offset by lower process
development costs as we transitioned from R&D to manufacturing for our 14nm process technology.
R&D spending increased by $1.8 billion, or 22%, in 2012 compared to 2011. The increase was driven by
investments in our products for smartphones, tablets, Ultrabook devices, and data centers. Additionally, R&D
spending increased due to higher process development costs for our 14nm process technology, higher
compensation expenses mainly due to annual salary increases, additional expenses for acquisitions made in Q1
2011, and higher costs related to the development of 450mm wafer technology.
Marketing, General and Administrative. MG&A expenses increased by $31 million in 2013 compared to 2012, and
increased by $387 million, or 5%, in 2012 compared to 2011. The increase in 2012 compared to 2011 was primarily
due to two additional months of McAfee expenses in 2012 and higher compensation expenses, due to annual salary
increases as well as an increase in the number of employees.
Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)