Our marketable investments include marketable equity securities, equity derivative instruments such as warrants and options, and marketable equity method investments. To the extent that our marketable equity securities have strategic value, we typically do not attempt to reduce or eliminate our market exposure; however, for our investments in strategic equity derivative instruments, including warrants, we may enter into transactions to reduce or eliminate the market risks. For securities that we no longer consider strategic, we evaluate legal, market, and economic factors in our decision on the timing of disposal and whether it is possible and appropriate to hedge the equity market risk.

The marketable equity securities included in trading assets are held to generate returns that offset changes in liabilities related to the equity market risk of certain deferred compensation arrangements. The gains and losses from changes in fair value of these equity securities are generally offset by the gains and losses on the related liabilities, resulting in a net exposure of less than $10 million as of December 29, 2007 and December 30, 2006, assuming a reasonably possible decline in market prices of approximately 10% in the near term.

As of December 29, 2007, the fair value of our marketable equity securities and equity derivative instruments, including hedging positions, was $1.0 billion ($427 million as of December 30, 2006). Our investments in VMware and Micron constituted 92% of our marketable equity securities as of December 29, 2007, and were carried at a fair market value of $794 million and $123 million, respectively. Our marketable equity method investment had a carrying value of $508 million and a fair value of $522 million as of December 29, 2007.

To assess the market price sensitivity of our marketable equity investments, we analyzed the historical movements over the past several years of high-technology stock indices that we considered appropriate. For our investments in companies that have been publicly traded for only a limited time, we analyzed the implied volatility of the related company based on freely traded options. Our marketable equity method investment is excluded from our analysis, as the carrying value does not fluctuate based on market price changes. Therefore, the potential fair value decline would not be indicative of the impact on our financial statements, unless an other-than-temporary impairment was deemed necessary. Based on our sensitivity analysis, we estimated that it was reasonably possible that the prices of the stocks of our marketable equity securities could experience a loss of 55% in the near term (30% as of December 30, 2006). Assuming a loss of 55% in market prices, and after reflecting the impact of hedges and offsetting positions, the aggregate value of our marketable equity investments could decrease by approximately $565 million, based on the value as of December 29, 2007 (a decrease in value of $134 million, based on the value as of December 30, 2006 using an assumed loss of 30%). This estimate is not necessarily indicative of future performance, and actual results may differ materially. The increase in exposure from December 30, 2006 to December 29, 2007 is due to our purchase of VMware during 2007, its stock price volatility, and the weight of our investment in VMware in relation to our total marketable equity securities.

Many of the same factors that could result in an adverse movement of equity market prices affect our non-marketable equity investments, although we cannot quantify the impact directly. Such a movement and the underlying economic conditions would negatively affect the prospects of the companies we invest in, their ability to raise additional capital, and the likelihood of our being able to realize value in our investments through liquidity events such as initial public offerings, mergers, and private sales. These types of investments involve a great deal of risk, and there can be no assurance that any specific company will grow or become successful; consequently, we could lose all or part of our investment. Our non-marketable equity investments, excluding investments accounted for under the equity method, had a carrying amount of $805 million as of December 29, 2007 ($733 million as of December 30, 2006). The carrying amount of these investments approximated fair value as of December 29, 2007 and December 30, 2006. As of December 29, 2007, the carrying amount of our non-marketable equity method investments was $2.6 billion ($2.0 billion as of December 30, 2006) and consisted primarily of our investment in IMFT of $2.2 billion ($1.3 billion as of December 30, 2006).