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Politics : Formerly About Advanced Micro Devices
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To: Bill Jackson who wrote (84760)1/3/2000 12:11:00 PM
From: kash johal  Read Replies (1) of 1573045
 
Bill,

Re:"kash, You are quite correct in stating that Intel needs to buy the leaders to assume a lead role. Buying those 2-3 tier defeated companies involves an implicit assumption that they lost for want of money? However these companies lost their place through lack of good tech and the markets/buyers decided.
They are doing some good things in getting larger patent portfolios with which to force deals from the other players, but for most of their buys they show lack of foresight and excess miserliness. I am sure they do not want to expand shares without limit by paper transactions and some of the front players have earned large caps and would need huge amounts of cash/loans to swallow. So they are doing at least one good thing...looking for tiny creative places where a few $$ can make a large difference a few years down the road."

Intel as the dominant CPU company needs to diversify, particularly if they want to keep frowing and showing good earnings. Particularly as desktop CPU's become commodity markets.

Where Intel has done very well IMHO:

Server push with Xeons etc.
Laptop market with lower power and clever clocking/power management.
VC investments to grow overall demand.

IMHO, they have flubbed several areas:

Desktop Chip sets - just look at Rambus/Camino disaster.
Server Chip sets - losing design wins to Reliance - due to inability to support DDR-SDRAM.
Graphics - 740 plus C&T.

Jury is still out on the acquisitions of course.

But buying a $200M/yr biz and expecting it to grow to $2Bn within a few years against entreched competitiors is a flawed strategy.

And if each of Intels acquisitions does not pay off in several billion dollar sales in 2-3 years then the acquisition is worthless IMHO. As it simply cannot provide Intel with enough earnings/sales to be meaningfull to a $30bn company.

I worked at GE for a while and Jack Welch had a simple strategy - he jettisoned any business that wasn't number 1/2/3 in its market. He only did major acquisitions of companies that were 1/2/3 or were adding to entrenched groups. In many ways it was absolutely brutal but the results have been quite impressive.

As far as dilution - sure its an issue but the leaders are expensive for a reason.

regards,

Kash
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