Intel (INTC)

Intel Speaker #1:

Yeah, let me talk about the context. Really, all the CEO was trying to show on that was that there was a very severe inventory correction taking place in the market for our products and for computers in general, and he was trying to signal that it looks like we've worked our through the inventory correction. He was not attempting to say that demand necessarily is going to increase, but it appears as though there's been a stabilization of demand, and then on top of that, the inventory correction appears to have worked its way through.

So there should be at least stability returning to the business. Whether or not that translates into growth is really something we can't predict, but it does appear -- the signs we're seeing appear that our business isn't going to turn south from here -- again, knock on wood -- barring further economic deterioration that we just aren't seeing at this point. But the fundamentals of the business we're in do show signs of bottoming, and he just wanted to make that point.

Moderator:

Right, right. So other than a stock price recovery, are there any other reasons that the board or the company would consider not actually implementing the exchange?

Intel Speaker #2:

Great question. Certainly a stock price recovery would impact that decision significantly. Right. It's kind of the problem we're all wishing for, if you will, in regards to this program. I think that would be the major driver. You know, because that's going to determine whether there's a significant enough number of shares to be worth going after, and if the ratios would be appealing enough for employees to voluntarily tender their current underwater shares. So a recovery would do it.

The only other things that might influence that decision, I think, are more extreme situations: if something significant happened in the business or something significant happened in the broader economy that was completely unexpected, we would probably think about whether we needed to go forward with this program or not. You know, if there was a significant downturn from here, we would probably be faced with having to move to actual broad layoffs, something we've done a pretty good job of avoiding in the near-term because of the actions we'd taken a couple years ago. If we were going to do something like that -- heaven forbid -- it wouldn't make sense to do the exchange and then right after that separate a number of people, a large number of people who participated.

So barring something extreme like that, I think it's really the stock price, where it is relative to the underwater options, that drives the decision.

Moderator:

Mm-hmm. Okay. Thanks. There was actually another question comes in. It actually makes reference to the 2006 plan's terms itself, and it looks like within the proposal you're clarifying the restriction on repricing. And I guess first of all, is this an act in terms of getting shareholder approval for this cancel and exchange that Intel had to take, or could they have done it without shareholder approval? And secondly, is this change to the 2006 plan to address potentially that opportunity to conduct a repricing without shareholder approval?

Intel Speaker #2:

Okay. That's a good couple of questions. So first, to be completely fair to the other company, while they ran their exchange program without shareholder approval, the reason they were able to do that is it was expressly called out in their equity plan, which was approved by shareholders, that they could do an exchange without returning to shareholders for their approval. So, you know, there was an opportunity for shareholders to vote on it. I still am not real thrilled with the way they ran their exchange, but that's just me playing armchair quarterback.

Our program -- we did not have a clause in our long-term plan that allowed us to do an exchange without shareholder approval, so by default we'd need to go in front of shareholders for approval of the program, and I like to believe it's something we would do anyway. You know, we do value shareholder input and the relationship with shareholders. We believe our program is constructed to make employees or to incent employees to act in the best interests of shareholders, and we try to verify that and validate it with both shareholders and employees.

So I don't think it's something we would ever do without going in front of shareholders, and it's something I think we would only ever do in extreme cases. You know, I've learned never to say never, but I have a hard time envisioning any circumstance where we would ever want to do this, and given the effort required.

And then the language in the proxy -- and [my colleague] might be better to speak to his -- but I believe what we're saying in the new plan is that we would not do a repricing under any circumstances without going to shareholders beforehand. That's actually what the clause says.

Intel Speaker #3:

The language is just positive clarification. It's not a takeaway. It's just being more explicit about what we mean in terms of what we would not do without stockholder approval. So it's meant to be stockholder-friendly.

Moderator:

Okay. Thanks for that. Well, we're unfortunately at the end of the hour, and I think we're out of questions, so if any of you gentlemen would like to wrap up, certainly I'd like to offer you that opportunity.

Intel Speaker #1:

I think I've covered everything. Yeah, I think I've covered everything. So, if you have anything . . .

Intel Speaker #3:

No, I think we're in relative good order. Hopefully we've been able to explain the key points of the program. We think, particularly in relation to some other programs, that it is stockholder-friendly. As described, the fact that it's value-neutral we consider to be very

important. We've taken a large number of steps in the course of recent months to conserve cash. Many of these steps have directly and negatively affected compensation to our employees.

This just happens to be an interesting circumstance where we can do something positive which we think is also positive for the stockholders and the corporation as a whole at no additional cost. We're reusing the Black-Scholes expense already incurred in connection with these options, and we think that's a classic win-win circumstance.

Moderator:

Great. Thank you,. That's a great --

Intel Speaker #2:

I would just add, if there's any questions that come in, we would love to take those questions directly or from you in any way. So don't hesitate to contact investor relations. We would definitely be willing to talk with any stockholder directly if they have a question or concern they want to follow up with us on.