Analyst Conference Summary

conference date: January 15, 2008 @ 2:30 PM Pacific Time
for quarter ending: December 31, 2007 (4th quarter 2007)

Forward-looking statements

Overview: Pretty good quarter.

Basic data:

Revenues were $10.7 billion, up 23% sequentially from $8.7 billion and up 10% from $9.7 billion year-earlier.

Net income was $2.3 billion, up 77% sequentially from $1.3 billion and up 53% from $1.5 billion year-earlier.

EPS was $0.38 per share up 73% sequentially from $0.22 and up 46% from $0.26 year-earlier.

Guidance: Q1 2008 revenue of $9.4 to $10.0 billion, 56% gross margin. R&D + MG&A between $2.8 and $2.9 billion. Restructuring $100 million. Other income $175 million. Depreciation $1.1 billion.

Q1 sequential decline is more than average seasonal decline, but revenue midpoint is 10% higher than in 2007.

57% midrange for full 2008 gross margin guidance.

Conference Highlights:

Record quarter. Operating income was $3 billion and margin was over 28%. Revenues were just below the midpoint of expectations. Net income and EPS rose far faster than revenues. Gross profit margin was 58%, up 8.5% from year-earlier and up nearly 7% sequentially. Was 1 point higher than forecast.

Regained product leadership across product lines. 45nm ramp is going well, with over 30 products now shipping in high volume. Costs declined.

Microprocessor and chipset units and revenue hit a record. NAND memory was lower than expected due to lower ASPs (average selling prices), but units ramped up. NOR memory met expectations. Restructuring charge was about $104 million more than forecast due to impact of Numonyx transaction.

Server business was great with double digit sequential and year/year growth.

Mobile unit growth continues strong for both processors and chip sets. System price points have expanded downward and are expected to continue.

Desktop business quad-core shipments grew 40% sequentially. Chip sets growth was strong.

Channel business had record shipment and inventories were healthy.

Cost of sales was $4.49 billion. Gross margin was $6.23 billion. R&D expense $1.48 billion, marketing, general and administrative $1.46 billion, restructuring $234 million. Total operating expenses were $3.18 billion. Operating income was $3.05 billion, interest and other income $233 million, tax provision $990 million.

Microprocessor ASPs were flat.

Cash and short-term investments totaled $14.9 billion, up $2.3 billion from Q3.

$1.5 billion in stock repurchases during quarter.

By geography revenue: 50% asia, 19% Americas, 21% Europe, 10% Japan.

March 5 and 6 will be analyst days presentations.

86,000 employees at end of year, far lower than year-earlier.

$170 million decline in inventory during the quarter.

Q&A:

Microprocessor gross margins in 2008? Unit cost improvements in CPUs were responsible for most gains in 2007. Numonyx completion in Q1 will take that out of equation.

Servers? Making good inroads back into the MP market with quad-core chips.

Seasonality Q1 guidance due to macroenvironment or what? In Q4 computing related products grew seasonally as expected. In Q1 a variety of small factors has us conservative in guidance, such as weak NAND pricing, supply agreements with Marvel going away. But also economic indicators. CPU business is seasonally down in Q1, but demand grew throughout Q4, inventory is lower than we would like.

Restructuring continuing? Not until we close Numonyx transaction. There will be restructuring costs in 1st half, but not so much in second half of 2008.

Europe demand and channel inventory? Very strong Q4 in Europe. Customer reports are strong so far into January. Replenishing older inventory with 45nm and quad core. Would like to build inventories in Q1.

Full year 2008 gross margins include good news on divestiture and structural improvements.

Why not more unit cost benefits from 45nm ramp? Competition impacts midrange of our stack and down.

NOR ASPs were strong based on increased densities, but units were down.

Did your notebook CPU business slow? Mobile processing had double digit unit growth, but it is moving into lower-end and emerging markets, so lower profit per CPU. Q1 proceeds from sales to Marvell will drop from Q4. But out costs will improve.

Capital expenditures will mainly be for 45nm build-out, but end of 2008 will start up 32nm. 45nm has cost less than we expected, and is proceeding faster.

PC industry market impact? Most industry analysts have low-double digit volume growth assumptions for 2008 over 2007. We are building our capacity around that. No forecast on market share, but our product line is solid and our manufacturing capacity is unconstrained compared to the market.

Customers are very satisfied with server products being shipped. "I think the wind is at our back at this point."

Emerging markets? Much of the growth comes from sales in emerging markets, notably China. Mobile ASPs are better than desktop ASPs, even as lower end of notebook market gains momentum. 75% of Intel's revenues are not in the U.S., but even in U.S. we are not seeing a downturn in demand for our products.

Cash will continue to be returned to shareholders through buy-backs and dividends; will not give specifics.

Graphics? Working on improving performance in integrated graphics.

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