Here is the Craig interview;
Intel's Craig Barrett (Transcript of Interview)
12/5/00 4:01:00 PM
Source: Bloomberg News
****THE FOLLOWING IS AN UNOFFICIAL TRANSCRIPT.**** BLOOMBERG L.P. DOES NOT GUARANTEE THE ACCURACY OF THIS TRANSCRIPT.
Hong Kong, Dec. 5 (Bloomberg) -- The following is a transcript of a Bloomberg interview with Craig Barrett, president and chief executive of Intel Corp. The reporter is Linus Chua.
LINUS CHUA: Hi. With me today is Craig Barrett who's the Chief Executive at Intel Corporation, the world's biggest computer chipmaker. Dr. Barrett thanks for joining us at Bloomberg.
CRAIG BARRETT: Pleasure to be here.
LINUS CHUA: Well, um, let's start by looking at your stock price. It's fallen about 20 to 30 (INAUDIBLE) earnings (INAUDIBLE) 72% in the most recent quarter. Um, are you comfortable with your stock price right now and what are you going to do to persuade investors to buy?
CRAIG BARRETT: Well, actually, our stock has dropped even more than that. It's at about a 52-week low and it's probably down about 50% from where it was. And I actually think it's a buy at that price. What we're doing to insure our investors of our future is what we've always done, which is to introduce great new products, show that we're a growth company and be a technology leader. I don't know what else to do besides that.
LINUS CHUA: Right. But there's so much concern about the outlook of the chip industry overall and being, you know, the biggest chip industry exposed to that whole worry out there.
CRAIG BARRETT: Well, I look at it slightly differently that there are a number of things going on in the world today and especially here in Asia. One is the build out of the Internet infrastructure, build out of the communications infrastructure, both wired and wireless.
LINUS CHUA: Um-hum.
CRAIG BARRETT: The convergence of computers and communication. If I look at worldwide--as I look over the next five years, I think there's immense growth for companies like Intel, Microsoft, Cisco, the lead suppliers of computers and communication. All of those companies that I just mentioned have been hammered in the stock market recently. So I look upon this as a relatively short-term issue. What we're all trying to do is continue what we've done in the past, bring great new technology in the marketplace. And you usually grow out of slow periods or down periods with new products. You don't grow out of them by cutting back and laying off people and trying to save your way out. You grow out of them with new products and new technology.
LINUS CHUA: Right. Now, I know you're expecting 42 cents a share for the fourth quarter. Are you comfortable with that or are you comfortable in exceeding that or are you looking at--
CRAIG BARRETT: We don't give guidance in earnings; we give guidance in what we think sales will be.
LINUS CHUA: Um-hum.
CRAIG BARRETT: We had, I think, a relatively conservative forecast for the fourth quarter. We said it would not grow as fast as fourth quarters in the historic past have grown. So we have already put out a somewhat conservative forecast.
LINUS CHUA: I think you're looking at about 48% increase.
CRAIG BARRETT: That's our guidance at the current time.
LINUS CHUA: Do you think you'll be at the high end or the low end of that range?
CRAIG BARRETT: I'm not going to refine that comment at all about guidance we've given, and that's for people like you to figure out where we're going to be.
LINUS CHUA: Okay. For year 2000, analysts are expecting $1.69 a share. For year 2001, they're expecting $1.71 a share. Now, that shows that Intel's profit is going to see little change at all. How do you feel about that kind of outlook for your company and your industry?
CRAIG BARRETT: Well, first of all, you have to analyze those profits. The year 2000 profit has some one-time gains and the big tax refund and a major gain from selling a lot of stock in Micron that we had made an investment in earlier on. So I think if you subtract out those, you'll see very reasonable earnings per share growth from 2000 to what they're forecasting for 2001. Again, we don't forecast our earnings, but I just want to baseline you. You have to have an apples-to-apples forecast here.
LINUS CHUA: Right. Some analysts are saying that, you know, with your early warning for the most recent quarter, if given room for competitors like AMD to catch up, how do you feel about those comments?
CRAIG BARRETT: I think we have some great technology to compete with people like AMD, Transmeta, the people who are in our microprocessor space. We just introduced the Pentium IV microprocessor. It's had a great introduction. It's a new micro architecture. It has a lot of performance headroom. We introduced it at 1.5 gigahertz. It's the undisputed king of microprocessors right now. It will be well over 2 gigahertz next year. So it gives us a lot of headroom at the performance end. If you go back to the mobile processor family where we compete against people like Transmeta, we introduced the Pentium III processor family with some speed step technology. You can scale down the performance and scale down the power consumption. We think we outperformed Transmeta, both in performance and in power consumption in the mobile end. So we think we've really covered the spectrum of products from the very high end to the laptop end in the processor family. But I'm comfortable with that product lineup now.
LINUS CHUA: And given that your biggest customers are still the world's biggest PC makers, how comfortable are you with the outlook for PC sales? People are talking about slower sales in just about every region, even in Asia where you're supposed to see strong growth.
CRAIG BARRETT: Well, I tend to look at this more on a longer- term basis rather than on a week-to week or a month-to-month basis. We're still building out the Internet infrastructure everywhere and especially here in Asia and in the developing countries like Latin America and Eastern Europe. Communications infrastructure is still building out. I think this bodes well for companies like Intel, like Cisco, like Dell, like Microsoft, all those companies whose stock has taken a real hammering in the marketplace. I happen to think I have a very bright future in the long run.
LINUS CHUA: Right.
CRAIG BARRETT: So I find it really a dichotomy that we're all being hammered in the market in the short term but I think our prospects are very bright over the intermediate to longer-term future.
LINUS CHUA: Right. Okay. You mentioned companies like Cisco which are Internet and communications and that's sort of an area you're moving into to make chips for communications equipment makers (INAUDIBLE) what percentage of your sales right now. Where do you expect that to be in, say, five years given that that's what you need to offset the maturing PC market?
CRAIG BARRETT: Well, about 20% of our revenue comes from communication- and networking-type devices today. And those businesses are growing faster than our core PC business, microprocessor chips, that business. So those businesses are growing perhaps 50% a year. Our core business is growing probably more like 10% a year. So, increasingly, our revenue will come from networking and communications as well as microprocessors as we grow forward.
LINUS CHUA: Right. Now, you have farmed out some of your manufacturing work to Asian manufacturers like Taiwan Semiconductor. What percentage of your manufacturing is outsourced and where do you see that going in five years?
CRAIG BARRETT: It's been a relatively small percentage of our wafer manufacturing in the past. We do a lot more outsourcing from an assembly standpoint than we do from a wafer-manufacturing standpoint. But it's typically less than 10% of our total silicon wafer manufacturing is outsourced to people like TSMC. I don't think that that will change dramatically going forward. We still are a very big consumer of leading edge state-of-the-art silicon for our microprocessors. And you can't buy that capability in the outside. That's something we have to do ourselves internally. So that's the preponderance of our silicon capacity. We couldn't outsource that even if we wanted to.
LINUS CHUA: Okay. Now, just to wrap up. Can you give us an outlook for your company, say, in the next couple of years, as well as--well, given that, you know, you're one of the first big tech companies to come out with a warning, what can you do to assure that that will not happen again?
CRAIG BARRETT: Well, there's nothing I can assure that it won't happen again. We're somewhat at the mercy of the marketplace and this marketplace moves very rapidly. Last quarter, third quarter, I think we were hindered by what happened in Europe. The Euro went down. There were concerned over oil prices in Europe and this basically stopped IT purchases. It's very difficult for us to forecast those things. But I think if you look at the marketplace and what's happening with the Internet build out around the world, communications build out, both wired and wireless, around the world, the convergence of communications and data into a common backbone, there's just an immense amount of high-tech infrastructure that has to be put in place and companies like ourselves are the companies that will provide those basic building blocks for that infrastructure. So if I look at the long-term, the next year, two years, five years, I think there's a very bright future for the high- tech infrastructure companies, the Ciscos, the Intels, the Microsofts. So I'm bullish on our prospects in the long-term. What happens next month is more difficult for me to forecast and that's quite often an impact of what the analysts say and what people like yourself say and what the newspapers say about our prospects. But long term, we're still very bullish about the future for our company.
LINUS CHUA: Okay, Dr. Barrett. Thanks so much for joining us. And I've been speaking with Craig Barrett who is the Chief Executive at Intel. |
