In 2007, we continued to focus on extending our product leadership; leveraging our world-class process technology and manufacturing capabilities; and creating a more efficient, customer-oriented Intel. Our fiscal year results reflect the significant progress we have made in all of these areas. Revenue in 2007 was $38.3 billion, up 8% over 2006. Our operating income was $8.2 billion, up 45% over 2006. Net income for 2007 was $7 billion, up 38% over 2006. Our cash dividend payout reached a record $2.6 billion, and we announced a 13% increase in our cash dividend beginning in the first quarter of 2008.

Renewed focus on core strengths

We have renewed our focus on leveraging two core strengths that distinguish Intel from the rest of our industry: the Intel^® architecture and our unmatched ability to bring cutting-edge technologies to market year after year. As part of renewing our focus, we have divested several smaller operations—including those related to application processing, optical, and certain telecom products—and are contributing the assets of our NOR flash memory business to a newly formed independent company, Numonyx. At the same time, we are investing in new areas where we believe the application of highly integrated Intel architecture affords large growth opportunities, such as:

• Energy-efficient, low-cost mobile Internet devices and ultra-mobile PCs that enable people to communicate, enjoy digital media, and access the Internet wirelessly.
• New types of consumer electronics devices that combine entertainment functions with Internet connectivity.
• Scalable, high-performance visual computing solutions that integrate vivid graphics and supercomputing performance for scientific, financial services, and other compute-intensive applications.
• Low-cost PCs designed to meet the needs of first-time computer users, particularly in emerging markets.

Advancing corporate responsibility

More and more, the global need for energy efficiency is affecting everything we do—from how we build and operate our facilities to how we design our products. We topped Corporate Responsibility Officer magazine's "10 Best Corporate Citizens by Industry 2007" list for technology hardware companies, and were the Technology Market Supersector Leader of the Dow Jones Sustainability Index for the seventh consecutive year. Such recognition acknowledges our global health and safety, community, and education programs, as well as our efforts to reduce our impact on the environment.

Ground-breaking products and processes

We have established a roadmap for sustained technology leadership through our "tick-tock" strategy of introducing a new silicon process technology approximately every two years and ramping the next generation of microarchitecture in the intervening years.

Our 45-nanometer (nm) processors, launched in November 2007, were designed from the ground up with energy efficiency in mind. As of the end of February 2008, we offered more than 30 of these processors, which are built using Intel 45nm Hi-k metal gate silicon technology, an entirely new transistor composition that minimizes electrical leakage and enables us to continue the pace of innovation. They boast nearly twice the transistor density—up to 820 million transistors for quad-core processors—compared to previous chips built on our 65nm technology, and have set a number of records on key industry performance benchmarks, while consuming less power. These eco-friendly processors are also manufactured using a lead-free process.

We are on track to ship our new, highly innovative microarchitecture—code-named "Nehalem"—in 2008, extending our lead in both performance and power. We have also already demonstrated our 32nm process technology, scheduled for introduction in 2009.

Strong demand for our products

Throughout 2007, we saw robust demand for our products across multiple business segments and geographies. In November 2006, we launched the industry's first quad-core processors, and by the end of 2007, we had shipped more than 6 million quad-core units. In 2007, we completed our transition to the Intel^® Core™ microarchitecture, delivering its energy-efficient performance benefits across our entire desktop, mobile, and server processor lines.

Our integrated platforms—which combine Intel processors and other technologies to address specific user needs—continue to provide value that customers can't get elsewhere. Platform products such as those built with Intel^® Centrino^® processor technologies have enabled us to take advantage of the worldwide shift from desktop to mobility products, contributing to revenue growth in that segment of 19% year over year.

Building on 40 years of innovation

We have also made significant progress on improving efficiency across all of our business operations. For example, during 2007 we achieved our goal to reduce the amount of time it takes to process wafers in our factories by 50%. We recognized savings of about two and a half billion dollars in 2007 and expect additional savings in 2008 as a result of our ongoing efficiency efforts. In addition, our 2007 customer survey results indicate significant improvements in our customer service and responsiveness.

I am extremely proud of our employees, and as we approach our 40th anniversary in July 2008, I have no doubt that they will continue to carry on Intel's unwavering commitment to moving technology forward and creating products that change people's lives.

Paul S. Otellini, President and Chief Executive Officer