Cash generated by operations is used as our primary source of liquidity. As of December 29, 2007, we also had an investment portfolio valued at $19.3 billion, consisting of cash and cash equivalents, fixed-income debt instruments included in trading assets, and short- and long-term investments. Substantially all of our investments in debt instruments are with A/A2 or better rated issuers, and the substantial majority of the issuers are rated AA/Aa2 or better. In addition to requiring all investments with original maturities of up to six months to be rated at least A-1/P-1 by Standard & Poors/Moody's, our investment policy specifies a higher minimum rating for investments with longer maturities. For instance, investments with maturities beyond three years require a minimum rating of AA-/Aa3. Government regulations imposed on investment alternatives of our non-U.S. subsidiaries, or the absence of A rated counterparties in certain countries, result in some minor exceptions, which are reviewed annually by the Finance Committee of our Board of Directors. As of December 29, 2007, $9.5 billion of our portfolio had a remaining maturity of less than three months, and a substantial majority of our investments have remaining maturities of two years or less. In 2007, we did not recognize any other-than-temporary impairments on our portfolio of available-for-sale investments. During 2007, $24 million of unrealized losses were recognized related to debt instruments classified as trading assets, and as of December 29, 2007, $62 million of losses were unrealized related to debt instruments classified as available-for-sale. Substantially all of our unrealized losses can be attributed to fair value fluctuations in an unstable credit environment. As of December, 29, 2007, only $125 million of our investments did not comply with our credit guidelines, due to rating downgrades after the initial investment. However, these investments continue to be rated as investment-grade securities.

Our portfolio includes $1.8 billion of asset-backed securities collateralized by first-lien mortgages, credit card debt, student loans, and auto loans. As of December 29, 2007, approximately one-third of our asset-backed securities were collateralized by first-lien mortgages. The mortgage-backed securities have an 80% loan-to-value ratio on average, and they include only first-lien mortgages. The average subordination level of the securities that we held as of December 29, 2007 was 27% (ranging from 18% to 40%), implying that the mortgage pool would have to suffer losses beyond those levels before our securities experience realized losses. In 2007, our asset-backed securities experienced unrealized fair value declines totaling $42 million of which $19 million was recognized in our income statement for those classified under trading assets. As of December 29, 2007, all of our investments in asset-backed securities were rated AAA/Aaa, and the weighted average remaining maturity was less than two years.

We have the intent and ability to hold our debt investments for a sufficient period of time to allow for recovery of the principal amounts invested.

We continually monitor the credit risk in our portfolio and mitigate our credit and interest rate exposures in accordance with the policies approved by our Board of Directors. We intend to continue to closely monitor future developments in the credit markets and make appropriate changes to our investment policy as deemed necessary. Based on our ability to liquidate our investment portfolio and our expected operating cash flows, we do not anticipate any liquidity constraints as a result of the current credit environment.

Another potential source of liquidity is authorized borrowings, including commercial paper, of up to $3.0 billion. There were no borrowings under our commercial paper program during 2007. We also have an automatic shelf registration on file with the SEC pursuant to which we may offer an indeterminate amount of debt, equity, and other securities.

We believe that we have the financial resources needed to meet business requirements for the next 12 months, including capital expenditures for the expansion or upgrading of worldwide manufacturing and assembly and test capacity, working capital requirements, the dividend program, potential stock repurchases, and potential acquisitions or strategic investments.