R. Kevin Sellers - Vice President, Investor Relations Paul S. Otellini - President, Chief Executive Officer, Director Stacy J. Smith - Chief Financial Officer, Vice President

Ross Seymore – Deutsche Bank Tim Luke - Barclays Capital Mark Lipacis - Morgan Stanley Uche Orji - UBS Doug Freedman - Broadpoint Adam Benjamin – Jefferies Manish Goyle - C.R.E.F. Stacy Rasgon – Sanford Bernstein Glen Yeung - Citigroup John Pitzer - Credit Suisse Sumit Dhanda - Banc of America Merrill Lynch James Covello - Goldman Sachs Graham Tanaka – Tanaka Capital Management Craig Berger - FBR Capital Markets Suji De Silva – Kaufman Bros. Gus Pritchard - Piper Jaffray Brendan Furlong - Miller Tabak Hans Mosesmann – Raymond James

Welcome to the Q4 2009 Intel Corporation earnings conference call. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Mr. Kevin Sellers, Vice President of Investor Relations. Please proceed, sir. R. Kevin Sellers: Thank you and welcome everyone to Intel's fourth quarter 2009 earnings conference call. I am joined today as usual by our Chief Executive Officer, Paul Otellini and Chief Financial Officer Stacy Smith. Our earnings release and updated financial statements were released today at approximately 1:15 PDT and can be found on our investor website, intc.com. This quarter we continued the practice that we started last quarter of posting additional management commentary from CFO Stacy Smith to our investor website. This commentary was posted at approximately 1:30 p.m. PDT and contains added detail about our quarterly performance that was previously reviewed in prepared remarks during our conference call. As we begin our call, let me remind everyone that today’s discussion contains forward-looking statements based on the environment as we currently see it and as such does include risks and uncertainties. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially. If during our call today there are any non-GAAP financial references made, we will post the appropriate GAAP financial reconciliations on our investor website. So with that, let me hand it over to Paul for some comments followed by brief remarks from Stacy. Paul?

Thanks, Kevin. Our fourth quarter results cap a great year of execution and innovation for Intel. We started the year in one of the deepest recessions in our history and emerged from it with better products and technology driving new demand for computing worldwide. Our restructuring efforts have born real fruit by improving the operational efficiency of the company, driving relatively good results in challenging times and exceptional results in a stronger market. The demand picture in the quarter reflected broad based strength across all regions and all product categories with notebooks leading the way. Our product mix was also a notable highlight. Demand for our latest generation of processors, both PC and server, was particularly strong providing an ASP uplift in the quarter. Inventory levels remain in good shape with OEM component inventories roughly flat quarter-over-quarter and below levels of a year ago. Distributor inventories are down sequentially. The combination of much stronger sell through and lower year-over-year inventory levels gives us comfort that the supply chain continues to operate very efficiently. Looking across our product segments servers had a very strong quarter. The value proposition of Nehalem is clearly evident and we are seeing a demand shift towards the high end of the performance stack, improving average selling prices. Looking ahead over the next three months we are planning to refresh our entire server product line with the new 32nm Xeon in the single, dual and multiprocessor segments. It is noteworthy to point out that the Nehalem EX, our multiprocessor version, represents the biggest leap in performance in the history of the Xeon brand. We remain in an excellent position to benefit from the build out of cloud infrastructure as well as the reconfiguration of existing space centers for power performance efficiency improvements. Our Atom processor business also continues to do very well both in netbooks as well as in winning new designs for our growth initiatives. Atom design momentum is very strong with our new Pine Trail platform in over 80 netbook designs. In the embedded space we now have over 600 Atom based design wins and over 2,500 design engagements across 230 customers, 93 of which are brand new customers to Intel. At CES we also demonstrated progress with handheld and consumer electronics platforms built around Atom cores that were very well received. We demonstrated for the first time the LG GW990, a smart phone built with our yet to be released Atom Moorestown platform which was awarded Best Smart Phone of the show. This demonstrates the power of our architecture in bringing an uncompromising computing experience to handheld devices. Expect more meaningful news and announcements around these businesses during 2010. Our notebook business was exceptional this quarter with demand very strong across the globe. We have been carefully preparing for the shift to mobile and our product strategy is a reflection of that. To further enhance our PC lineup, at CES we formally launched 27 new processors produced with our leading edge 32 nm process technology, the biggest consumer launch of new processors since Centrino. Our new core processors are the first ever mainstream PC processors to integrate the graphics engine onto the CPU. This is Moore’s law at work driving increased performance and improved power and foreign factor characteristics to our new platforms. Our new graphics engine is notable in that it offers full HD video, great mainstream gaming and enhanced 3D capability. I am happy to report that early demand for these products is excellent. In closing, we had an outstanding quarter and enter 2010 in a very strong position. We have delivered breakthroughs in our product offerings and our competitive positioning through the Tick Tock development model. Our recently launched 32 nm process technology is the critical process capability that will not only bring computing to new levels but also allow us to broadly offer Atom system on chips into many new product categories. We are pleased with our current momentum and look forward to an exciting year in 2010. With that let me turn the time over to Stacy for a few comments.

Thanks Paul. The fourth quarter was one of our most profitable quarters ever due to a combination of solid execution, the ramp of innovative new products and a healthy consumer market. Fourth quarter revenue of $10.6 billion was up 28% from a year ago, the largest year-over-year percent increase in more than a decade. Our financial results reflect both significant improvements in our cost structure and higher microprocessor average selling prices. The impact of these improvements can be seen in the gross margin percent of 65% which was up 7 points from the third quarter and is the highest gross margin percent in our history. In the fourth quarter we achieved $2.5 billion in operating profit and $2.3 billion in net income. The PC market has recovered nicely with our microprocessor revenue excluding Atom growing 42% since the market bottomed in the first quarter. In the same time period, Atom microprocessors and associated chip sets have grown to $438 million in revenue in the fourth quarter and $1.4 billion for the year. Fourth quarter gross margin benefited from lower inventory write offs, improving costs and our exceptional product line up as we ramped and sold the first products manufactured on our 32 nm process technology. Total inventories increased $450 million due to these new 32 nm products. For 2009 gross margin was 56% including a 20 point increase from Q1 to Q4. For 2010 we are forecasting continued strong gross margin with the midpoint of our annual forecast at 61%. As a result of capital reuse and achieving efficiencies we were able to ramp 32 nm process technology and still bring down our capital forecast from our expectation at the beginning of the year. Our capital purchases for the year of $4.5 billion is down from our original forecast of around $5.2 billion and was less than the annual depreciation run rate. Operating expenses remain in tight control. This is most clearly seen in spending as a percent of revenue. In the fourth quarter spending for R&D and MG&A as a percent of revenue remained constant at 29%, down from 35% in the first quarter and 32% in the second quarter. The number of employees decreased by 1,000 people in the fourth quarter as a result of planned factory actions announced early in 2009. Revenue per employee for the year was $440,000, the third highest in our history. The fourth quarter of 2009 demonstrates the strength of our execution and business model. Excluding the impact of the $1.25 billion AMD settlement agreement taken in the fourth quarter operating profit was quarterly record $3.7 billion and as a percent of revenue was 35%. Total cash investments comprised of cash, short-term investments and debt security trading assets ended the quarter at $13.9 billion, $1 billion higher than the third quarter. Cash flow from operations was more than $3 billion. During the fourth quarter we paid the AMD settlement agreement, paid nearly $800 million in dividends and purchased $1.1 billion in capital assets. For the first quarter we are forecasting a seasonal decrease in revenue, taking the midpoint of our forecast range to $9.7 billion, a 36% increase in the first quarter of 2009. We are forecasting the midpoint of the gross margin range to decrease four points from the fourth quarter to 61%. In addition to the impact of the unit decline, the decrease is primarily due to the higher costs associated with the early ramp of the 32 nm based products. The fourth quarter was a strong finish to what turned out to be a good year. The improvements we have made to our cost structure and efficiency levels have led to exceptional financial results in the fourth quarter and served as a strong foundation upon which we can build in 2010 as we refresh our product line and ramp 32 nm process technology. With that let me turn it back to Kevin. R. Kevin Sellers: Thanks Stacy and Paul. We would now be happy to take your questions. As most of you know, Intel has a large number of analysts that cover our company. Like we did last quarter and in an effort to include as many of you as we can, we will be limiting each caller to one question only. If you need clarification on that question do please ask. We want to make sure we answer your question adequately but please no follow-up’s and no multi part questions. Operator, go ahead and introduce the first question.

(Operator Instructions) The first question comes from the line of Ross Seymore – Deutsche Bank. Ross Seymore – Deutsche Bank: A question on what your mix assumptions are for your first quarter and full year 2010 gross margin guidance?

Let me start with what we saw in the fourth quarter. I think that kind of serves as a baseline and then we will talk about Q1 and 2010. What we saw in the fourth quarter was really a very rich mix. We saw strength across the board on our new products and in particular what we saw was as we took first production on 32 nm we filled from the top. There was good market acceptance of those products. So a combination of that led to a rich mix in the fourth quarter. I expect that comes back down into a more normal mix range as we go across 2010. In particular we will be bringing out mainstream and value versions of the 32 nm products and that should say that the sales mix gets into a more normal range as we progress across the next several quarters. Ross Seymore – Deutsche Bank: And that will offset any of the enterprise improving year-over-year?

From an overall average selling price standpoint for 2010 we are predicting kind of a normal decline year-over-year. Keep in mind we have lots of things that go up and down. We will have a rich mix in the beginning of enterprise coming in but at the end of the day we do bring pricing down because we see unit growth potential in the consumer segment of the market and emerging markets. There is price elasticity there so that is kind of consistent with what you have seen from us the last several years. The price comes down, we drive unit growth with that and that ends up driving incremental gross margin dollars.

The next question comes from the line of Tim Luke - Barclays Capital. Tim Luke - Barclays Capital: I was wondering if you could clarify how you perceive you would like your inventory levels to trend as you move through the first quarter and through the year. If you could provide any incremental color on the mix of the inventory that seemed to move up somewhat in the calendar fourth quarter with your stronger revenue.

In Q4 it pretty much unfolded as we expected and as articulated on the last call. We saw an increase in inventory entirely due to the new 32 nm product. If you look at it on a unit basis it is pretty much flat quarter on quarter but we did have the cost associated with 32 nm, those early wafers tend to be pretty high cost products and as you have seen us do in prior transitions of new process technology we pretty quickly build inventory on the new stuff. You saw it in Q4. I expect to build a little bit more inventory in Q1 as I ramp 32 nm products. It won’t be the same magnitude we saw this quarter but it will be up some. Then it starts looking a little more normal as it progresses through the year relative to demand. But this is what we do as we ramp a new process technology. It is pretty normal and it is consistent with what I was expecting when I started the quarter. Tim Luke - Barclays Capital: I think you said your channel inventory was flat in the [inaudible] and the comment on the OEM inventory could you just reiterate that?

I think I said it was down sequentially. Of our product. Tim Luke - Barclays Capital: And the OEMs?

I think you will have to ask the OEMs on their call. Our view are complementary [inventory] in the hubs and the see through to the hubs we have suggests that they are roughly flat quarter-over-quarter and well under a year ago.

If you just kind of step back on this one when we look across the supply chain, it is a very complex supply chain, so looking at our authorized channel those inventories are down and visibility into a lot of the OEM inventories and a lot of that is now held in our hub and what we see in the down channel so retail, the shipping lanes and stuff, what we see is a healthy level of inventory relative to the demand we see out over the next couple of quarters.

I would add two things. One is our largest two customers have their quarters ending in January. Secondly, Chinese New Year is a bit earlier this year.

The next question comes from the line of Mark Lipacis - Morgan Stanley. Mark Lipacis - Morgan Stanley: You have three quarters in a row of double digit growth. I just went back to the model and I had to go back to the late 80’s I think to see that. I guess a lot of people are probably going to be wondering what happens next. You talk about the inventory and I guess my question is can you help us understand what percentage of your revenues where you have visibility into the inventories? Can you see pretty much 100% of the inventory at every place you sell into? Does the release of your products in Q1 of the new product cycle in Q1 versus Q3 does that risk changing any kind of customer order patterns?

I got a little lost in the question there. Let me take a shot and if I missed something you asked we will come back to it. The part of your question on what is our visibility into the supply chain, it is not perfect. It is a broad complex market out there that ranges from emerging markets with small white box players to big [MNCs]. I would say it is pretty good. We have I think a fairly sophisticated way to look across and see how much inventory is out there. Relative to what we believe demand is I think it is an appropriate level of inventory.

A little more color on that our distributor inventory we have 100% visibility into and that is about 25-30% of our business in units and dollars so that is the number I gave that was down sequentially. The OEM inventory we have hub systems with our largest customers representing the vast majority of our OEM volume and so you are dealing with something well above 50%. I don’t know the exact numbers but I expect in the aggregate between OEM hubs and distribution it is 75% of the numbers. So we have very good visibility into it. On the Q1 cycle we actually moved towards a Q1 refresh cycle quite some time ago. It was better for our customers. They liked it. They don’t want to have a disruption before holiday so it either is in the early summer, late Q2, or is in January and February. That works out best for them in terms of inventory management and gets new products out there for what is becoming a big part of the cycle, and that is Chinese New Year’s.

The next question comes from the line of Uche Orji – UBS. Uche Orji - UBS: A way to understand your 2010 outlook especially related to gross margin, given the way 2009 played out what is your sense as to how 2010 seasonality will play out especially if you can touch on corporate spending since we saw it flush in Q4. Should we anticipate some more spending from corporate in the future?

I don’t know how it is going to play out. Our view in terms of what we have built into our model for 2010 is a normal seasonal year off of a very good Q4. So in general when you extrapolate that out and do the math it gets you to double digit growth year-over-year because of the high peak in Q4 and the trough you had in the first half of 2009. We are building into our number set a modest recovery of corporate purchases of PCs. That is we are not building in anything extraordinary out of that. Just sort of normal return to deployment as the evaluation cycles for the new hardware and Windows 7 gets completed. What we are benefiting from in the second half of the year and I think we will continue to benefit from throughout this year is the extraordinary return on investment that is incurred by deploying new server technologies. The last technology was sort of a 9 to 1 ROI kind of technology. As we deploy the new Xeon products out it is 15 and 20 to 1. So we think that is compelling. The power conservation associated with that is compelling and it is one of the things that gives us optimism independent of PC refresh in the enterprise for 2010.

The other part of your question was gross margin seasonality. I would say it is a typical year from that perspective. We put out the forecast for Q1. 61% is the midpoint of that forecast range. Typically we would see a second quarter from a unit standpoint is going to be seasonally down. That means that typically the second quarter gross margin is going to be a bit below that 61% and then when we get into the second half of the year my expectation is it is above that 61% and that is how we get to 61% on average for the year.

The next question comes from the line of Doug Freedman – Broadpoint. Doug Freedman - Broadpoint: If we look at your business model and all of the effort being placed on new growth streams of revenue can you talk about the impact you expect that to have on the longer term operating model and especially on the operating income line?

I am going to go through that in quite a bit more detail in the upcoming May investor meeting so I think I will save the longer answer for that. I will just say our expectation is based on our performance leadership, software compatibility and the value proposition around i8 we can grow those businesses with a very healthy product margin, not dilute the overall gross margins of the company…we are on record as saying that, and I think if you look at the two businesses that are significant size today they are consistent with that belief. Our embedded business is a $1 billion plus business. It is running at product margins that are a little bit ahead of what the rest of our core business is. Atom and Netbooks we have grown that to now be a $1.4 billion force in 2009 also at a product margin that is right in there with the rest of the core business. So that is our expectation and we will talk more at the investor meeting.

The next question comes from the line of Adam Benjamin – Jefferies. Adam Benjamin – Jefferies: Just a question on price elasticity. Obviously in 2009 the end market pricing for PCs came down pretty dramatically, roughly 20-30% in some instances. I am just curious as you plan for 2010 how you are thinking about that driving the elasticity of unit growth that we saw in 2009 and how it could potentially impact pricing plus or minus.

2009 was a funny year as we all went through and know. The first half of the year the lights had gone off. What we saw over the course of the year was growth particularly in notebooks and netbooks around consumer purchases. This was not a robust year for corporate purchases. That alone, that mix shift alone to consumer and away from corporate was part of the reasons you saw PC prices on average dropping faster than you would have ordinarily seen. That is point one. Point two is there really wasn’t a new refresh cycle in terms of hardware last year. We had versions of our core product line out there but they were extensions of the existing technology. There was nothing really to drive sell up. The new core products we have just introduced particularly the i5 and i7 have great new technology in terms of the wireless display technology and turbo which gives you the performance boost when you need it and power savings when you don’t. I think the early excitement on those two product lines gives us some cause for optimism even in consumer space for an improved sell up cycle. Adam Benjamin – Jefferies: So it is fair to say as you are planning for 2010 you are thinking those two dynamics; one a mix shift back to the enterprise and one with new products can drive end market pricing back up and should help you drive your ASPs up as well?

No, I didn’t quite get there. Those were mature market comments. On top of that I think there will be continued growth like there has been over the last 3-4 years in emerging markets where the emerging markets outpace the mature ones. Clearly in emerging markets the average selling price of computers is lower than it is in New York City.

I think it is important to separate the mix within the segment of the market from the overall mix of our sales. We are refreshing products likely to have a nice benefit from that inside of each of the segments but the driver over the last 4-5 years has been emerging markets growing faster than mature markets, consumer growing faster than the rest of the market and there is good price elasticity there. It benefits us to bring the price down and sell our technology into those segments.

The next question comes from the line of Manish Goyle - C.R.E.F. Manish Goyle - C.R.E.F.: My question is on operating expenses. You showed good discipline in the quarterly results of 2009 and when I look at your first quarter guidance of $3 billion for $9.7 billion of revenue I am a little bit surprised because it is roughly the same revenue number you had in the first quarter of 2008 yet your operating expenses are $200 million lower. So I just wonder what changed and why you are not seeing better leverage?

Let me take a shot at that. First off let me go back to the commitment that Paul and I have made historically. We are still absolutely on the path that over time we are bringing down spending as a percent of revenue. I think we have had some good results in the last couple of quarters and our goal over time is we are going to continue to do that. When we look at 2010 we kind of think of our spending in a couple of different ways. First off, we are making some investments in R&D projects this year. We have had five years in a row of year-over-year employment decline. We will actually grow employment a little bit in 2010. So you haven’t seen that from us in a long time. We have some high return on investment projects where we are going to go and make some incremental investments. Secondly, there are a series of things that aren’t really related to the employment level that are going to impact the spending level in 2010. One is the categorization of how we categorize process engineering from year to year. Remember last year it was cost of sales. This year it is R&D. So that shift happens in kind of a digital fashion and that impacts the quarter-to-quarter walk you are doing. We are giving raises. We have revenue dependent initiatives that are going to be higher than last year. So the combination of those two things is really what you are seeing on the spending line. Neither of those changes the commitment that we are getting great results through our focus on efficiency and we plan to continue to bring that down over time. Manish Goyle - C.R.E.F.: For full year if I look at your first quarter guidance of $3 billion and full year guidance of $11.8 billion are you suggesting that even if you continue to hire your operating expenses will remain roughly flat quarterly or is there any other way to think about this?

I am not making a specific forecast for any quarter in the year and I am not making a specific forecast for 2010. We have articulated a goal as a longer term goal of bringing down spending as a percent of revenue. We have made good progress on that and we are going to continue to drive it over a longer term horizon.

The next question comes from the line of Stacy Rasgon – Sanford Bernstein. Stacy Rasgon – Sanford Bernstein: I would like to follow-up on that OpEx question from Manish. If I look at the OpEx this quarter guidance are down a little bit but it is still around $3 billion and you have total OpEx for the year pretty close to 12 which would imply flat OpEx on an average basis going forward. This is a case now where you potentially have like you said OpEx moving from cost of goods back into R&D. You are building out new businesses that you are not in right now in the mobile space and what not. I am just wondering, if you can walk us a little bit more through some of your assumptions around the OpEx growth going forward and that number that makes up the guidance for 2010?

So I am answering the right question, is your question on why is it so flat over the course of the year? Stacy Rasgon – Sanford Bernstein: I am actually wondering why it is not up a little bit more than it is given you have these other drivers. With the process development moving back into R&D and with new businesses you are ramping from relatively nascent amounts today I am just wondering why the OpEx growth wouldn’t be expected to be actually higher than kind of the flat level that seems to be implied off of the Q1 guidance?

The OpEx growth when you kind of think about it over the course of the year there are a couple of those elements that just get spread quarter-to-quarter. So the categorization of the research and development happened digitally. I failed to mention we are also picking up Wind River in 2010. That was an acquisition that we did in the back half of last year so that is kind of spread across every quarter. We do the same with the profit and revenue dependent spending. So it is probably a little flatter than you would expect. The increase in R&D projects in the scheme of things doesn’t move the number that much. As we have been, we are finding efficiencies in other places that offset some of that. So when you kind of take all that alchemy together you end up with a number that is kind of flattish quarter by quarter by quarter. Stacy Rasgon – Sanford Bernstein: And you don’t need to build any more SG&A to start selling more into the mobile space, for example, with the new Atom application?

No our finance group is so efficient we can sell a lot more than we are today. They are efficient as well as Paul points out.

The next question comes from the line of Glen Yeung – Citigroup. Glen Yeung - Citigroup: Can you quantify how much ASPs were up in Q4 and how much you expect them to be down? What is normal ASP decline for a year?

I can do it at some level of precision because all of those hit the gross margin reconciliation. So if we start with Q4 and you kind of think about the gross margin in Q4 and the increase we saw, the ASP accounted for about two points of that increase. When we think about the course of 2010 I am showing the 2010 gross margin reconciliation versus 2009 that I think the decline in ASP is worth about 2-3 points and I would say that order of magnitude is pretty normal. Q1 will be a small step on the way I think in the gross margin recon over time you will see that is about half a point down in the first quarter. Glen Yeung - Citigroup: If you say it was worth two points in a quarter of gross margin does that imply the average ASP was down 2%?

Up. Glen Yeung - Citigroup: Up. The same magnitude of how we should read that?

We all struggle to say we are up and we don’t see that all that often because of the phenomenon we said. I think you can work through the gross margin math on that. You will come up with something a little different than 2-3% but the gross margin was up.

The next question comes from the line of John Pitzer - Credit Suisse. John Pitzer - Credit Suisse: I want to revisit the mix question for this year. With your guidance of 2010 we will see normal ASP degradation. You kind of have some tailwinds that should be helping you. Consumer moves to corporate. You have the server cycle. You could make the argument that you will have a more robust [inaudible] product line this year and you have the introduction of [inaudible]. I am kind of struggling with why this wouldn’t be a better than average selling price year. Is this sort of an implication that Atom reaccelerates as a percent of the mix or can you help me reconcile what I see as more tailwinds than headwinds on ASP?

I will try and give you some color on that. I’m not sure I can fill in all the holes. We are all guessing. No one knows for sure. As I said earlier we are not programming into our guidance or our estimates any kind of overnight recovery of the corporate market. I think for a variety of reasons that will start coming back but it will come back based upon eval cycles, qualification cycles and IT shops and then as corporate budgets open up they have to decide whether they want to first buy PCs or servers. I think in terms of IT equipment. We really haven’t seen enough so far except for the server run up in the second half to be confident on when and what the rate of corporate PC refresh would be. Although we have built some into this number. Two, in terms of Atom we have now been at this for 18 months or a little more than that. Up to this point in time with all that data we have not seen any meaningful cannibalization of the notebook market by netbooks. Netbooks look to be 90% of them are clearly additive and they are clearly going into market segments that were unaddressed prior to this. In the first 18 months of the netbooks most people who bought them were buying them as incremental machines or travel companions. Principally in mature markets or tier one cities of emerging markets. I think in 2010 you will start seeing that phenomenon moving into emerging markets. As that does there may be a slightly higher mix of that but it certainly wouldn’t be cannibalistic to our notebook business. So we are kind of playing all these together in a stew and saying this is how we see the year coming out.

The next question comes from the line of Sumit Dhanda - Banc of America Merrill Lynch. Sumit Dhanda - Banc of America Merrill Lynch: On the 32 nm product or the new architecture products that really helped your selling prices in the fourth quarter I guess was that the primary driver for ASPs [within the] that given the volumes were not very large or did your older 45 nm generation product also help the ASP? Did you sell a much higher mix within the 45 nm products?

Within the client group it was I would say a mix of both but the 32 nm effect was pretty pronounced. As Paul said in his prepared remarks we brought out dozens of new products across the client on 32 nm. The way we plan our manufacturing is we kind of started the manufacturing at the highest end first and worked our way down and we are still working our way down into the mainstream and value price points. So that was a pretty pronounced impact in terms of the mix we sold in Q4. Sumit Dhanda - Banc of America Merrill Lynch: Despite the fact this wasn’t a big volume component of what you sold within the client business?

It was a not insignificant component of what we sold. We ramped these factors pretty fast. You can see it in our inventory results and in our sales mix. Or I can see it in our sales mix. We don’t show it to you.

The next question comes from the line of James Covello - Goldman Sachs. James Covello - Goldman Sachs: Could you give us some estimate with what you are going to do in factory loadings in Q1 and Q2?

Probably not at the level of granularity you are hoping for but I will give you a sense. Another one in May we are pretty specific and we will show you kind of quarter by quarter utilization as well as the forecast going into the future. We are in the sweet spot of loading. We are running nicely full. We have the ability to respond to some upside. We always want to have some of that but we are full to the point we are getting really good cost results. I would expect that to be the norm for this year.

The next question comes from the line of Graham Tanaka – Tanaka Capital Management. Graham Tanaka – Tanaka Capital Management: A little more on the 32 nm ramp. Pretty fast can I get a feel for what proportion of sales might have been 32 and more importantly what that might be by the end of the year. It seems to be that is probably one of the more important reasons for the bulk of sales ASPs going up in the margin is the 32 ramp being faster than expected and higher utilization?

I wouldn’t say it is faster than expected. We expected it to be pretty fast. Beyond that I will punt on that one as well and we will show you that data in May when we have the investor meeting.

The next question comes from the line of Craig Berger - FBR Capital Markets. Craig Berger - FBR Capital Markets: Can you explain why the first quarter gross margin guidance is 61% and then the year is also only 61% and any other color around that?

I would be happy to. I will apologize in advance because I think to explain Q1 I have to explain Q4 and to explain the year I have to kind of have to go through a lot. So if you will bear with me I will do that. Q4 came in several of the elements as we expected. We did see good news associated with the qualification for sale of the 32 nm products as well as sell through of some of the previously reserved material there. That was about 2.5 points of the increase we saw in Q4. We got the good news we were expecting in CPU volumes. They were seasonally up in the quarter. We got the good news we were expecting in lower excess capacity. In fact our excess capacity charges have now gone to zero for the quarter which we haven’t been there since the end of last year. The places where it was a little unexpected was the bump we saw in CPU ASPs. That was a couple of points of good news I wasn’t expecting when I first set the forecast. I was a little better in terms of unit cost than I expected. Not a lot but a little. Then you move into Q1. The drivers that take us from 64% down to 61%, first 65%...it is hard for me to even say that as an all time record. 65% down to 61%. The first is we are going to see some higher CPU costs. This is very consistent with what I showed you at the investor meeting last May. Those first wafers coming off of 32 nm as we are loading the factories tend to be pretty expensive. That is what ended up in inventory. That is what ships out in Q1. That is going to drive a little bit of a cost increase and then we kind of come down as we go through the year. So very consistent with what I showed you there. It is a seasonally down quarter from Q4 so we get a little bit of downward pressure as a result of lower CPU sales volumes. I do expect in Q1 my mix was a little less rich than what I sold in Q4. That is about half a point. So that is how you get to the 61%. I will pause there and see if that makes sense and then I will take you through the year so I don’t get too far ahead of you. Craig Berger - FBR Capital Markets: It does.

In a previous question I kind of gave what I expected to be the shape of the year. We start at 61%. Q2 tends to be seasonally down but so I expect that to be down from 61%. Then if you do the math you would say we are forecasting a second half gross margin that is something above 61% in the low 60’s. I think the debate you and I will have why is that in the low 60’s versus the mid 60’s and it really comes back to the conversation we have been having on ASP. A lot of things go right to get us into that low 60’s. We have got unit costs coming down, a relatively benign period in terms of other costs of sales so we don’t have significant start up costs or excess capacity charges or anything like that. Paul articulated we are anticipating robust unit growth. That keeps the factories pretty full but we are anticipating that pricing comes down some from where we are today. That brings us down a couple or few points over the course of the year.

The next question comes from the line of Suji De Silva – Kaufman Bros. Suji De Silva – Kaufman Bros.: A follow-up to that question on gross margin. What could make your 61% assumption for the year conservative? What are some of your assumptions that might be able to upside there just to understand the level here?

Great question. First of all we have to put that 61% into perspective. 61% is a great gross margin. It says a lot of things are going right for us so I don’t want to jinx this by talking about what has to go from a great gross margin to a perfect gross margin if you will. The forecast is assuming declining unit costs. It is assuming we are in kind of a benign cycle in terms of startup costs and other costs of sales. It is assuming good volume and all of that is baked in. We also see just continued great performance out of the factory network from a productivity and an efficiency standpoint and that helps our costs. If you wanted a scenario that would take us higher than that it would be a flattening out of the ASP curve or a richer mix or more units than what we have baked in and likewise I could come up with a list that takes me into the lower end of the range where we have a less rich mix or unit growth isn’t as robust as we thought and our factories aren’t as full.

The next question comes from the line of Gus Pritchard - Piper Jaffray. Gus Pritchard - Piper Jaffray: Real quickly I am curious if you can talk a little bit about the carrier as a channel and as you are thinking about upside for the year maybe that will play a factor? Do you feel comfortable you are going to have enough capacity?

The carrier channel has been around for awhile in notebooks. It is good but it is not explosive. What we saw in netbooks in the fourth quarter or the last 3-4 months of the year was carriers became a very significant portion of the volume of netbooks. Probably in a range of 25%. What led me to my comments earlier about netbook growth in emerging markets was really based upon our view that the carrier model will be very efficient in those markets because it is low entry price, subsidized model just like cell phones are and you get the PC and the bandwidth at the same time. I think that is likely to be a good piece of the netbook business. A growing piece of the netbook business over the course of 2010. In terms of upside, we have built pretty significant growth to that into the number set already so I don’t know there will be much upside there. Secondly, in terms of capacity I don’t see any issues on the horizon. We are planning for a very high end robust growth from a capacity standpoint in terms of the wafer starts we need to put in place and even then we have time to make some incremental decisions for the fourth quarter 2010 kind of volumes over the course of this year. So we will watch the first half of the year and then make the calls. Right now we believe we have enough buffer capacity coming on particularly in the 32 nm ramp and we have the older 45 nm line still intact to be able to handle virtually anything I can imagine being thrown at us.

The next question comes from the line of Brendan Furlong - Miller Tabak. Brendan Furlong - Miller Tabak: A question on the embedded/other Intel architecture. If you could give some color on what your expectations are for 2010. You mentioned 600 design wins. What is your expectation from time of design win to revenue with all those new design wins?

Let me speak to design wins and Stacy will tell you what he thinks of being better and a direction on that. Typically there is no such thing as an average design win in embedded. Typically it is sort of a year to 18 months from initial conversation to production. Along the way in that initial conversation you end up closing the design maybe 1/3 of the way through that. A lot of these units tend to run for multiple years. In some cases 10 years. Our embedded business has grown at double digit percent for the last three years. It will continue to I think out grow the company in terms of revenue but I am not going to give you a precise number.

Does that answer your question or did you have another question about other Intel architecture segment? I wasn’t sure. Brendan Furlong - Miller Tabak: No. That pretty much answers my question.

The next question comes from the line of Hans Mosesmann – Raymond James. Hans Mosesmann – Raymond James: A question about the transition of Westmere as it replaces [Penron]. How quickly can we see the cross over there in terms of units and if you could also explain with regard to Pine Trail over the existing Atom?

I think on the first part of the question Stacy already answered that we are not in a position to show you that number today and we will show you in gruesome detail at the analyst meeting in a couple of months. What we are doing with this cycle in general is using the technology to move 32 nm into the mainstream more quickly than we did with 45. The rate of crossover between 32 and 45 will be more a function of second half demand in total than capacity planning to cut one off versus the other. If demand is red hot the transition will be slower even though we will ramp 32 as fast as possible and if it less red hot it will be slower. In terms of Pine Trail I think we will move pretty quickly to transition that. R. Kevin Sellers: I want to thank everybody for joining the call today. As a reminder the quiet period for the first quarter will begin at the close of business on February 26, 2010. Our first quarter earnings conference call is scheduled for Tuesday, April 13, 2010. Thank you all and good night.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a great day.