Kash,
Re: Diversification
Craigs strategy is BRILLIANT.
The execution SUCKS.
Try looking at it from the point of view of the investor. Intel is a very successful company, but at this point, they can't find enough attractive opportunities for further investment in their core business that would generate acceptable return on investment.
So instead of returning the excess profit to the investors in form of a dividend, they try to become a venture capitalist, private equity investor, investment manager, turnover specialist, creditor.
Wouldn't the investor be better off deciding himself if he wants to invest in a bank, or buy into a venture capital, hedge fund etc, and go with the best of the class, rather than have electrical engineers making these investment decisions for him?
From the point of view of the management, there are a lot of incentive to hold onto the money of the investors, because they act as a general partner of an investment fund, investing nothing, and skimming a percentage off the top in form of appreciating options.
Most mature companies that have achieved saturation in their market do this.
If you look back to the 80s, diversification was the trend, and the results were horrible. Recognizing this, companies got out of these side business, and concentrated on their core competency.
Is Intel going to repeat this mistake a decade later? Or will Intel succeed where others (including most of the Japanese giants) failed?
Joe |
