John & Thread:
I don't think this has been posted (article from eWeek). Although I'm tired of the "piling on" of tech media and analysts on Intel & other tech firms, I'd like to see your thoughts on this content:
zdnet.com
Intel gears up to deflect mounting criticism
By Ken Popovich, eWEEK
February 23, 2001 4:40 PM ET
Unlike last year, Intel Corp. will come limping into its Developers Forum next week, hobbled by the softening economy and the weight of recent misfires.
The tone of this year's conference, in San Jose, Calif., is expected to be more subdued than last spring's session, when executives touted three new chips set for release in 2000. Ultimately, only one chip, the Pentium 4, made it to market. Another, code-named Timna, was scrapped, and the third, Itanium, has yet to be released.
Such missteps underscore what critics claim are serious internal problems plaguing the company. One of the main problems, many contend, is that Intel's recent buying spree -- in which it acquired more than two dozen companies for more than $7 billion in a bid to broaden its revenue base -- has yet to produce significant results.
In addition, the company's core chip business, which accounts for more than 90 percent of its income, has suffered from a series of missteps and the high cost of developing certain new chips.
A failure to execute
"[Intel's] failure to execute crosses marketing, manufacturing and some operational areas, suggesting that an executive change, either in staffing or structure, is required," said Rob Enderle, an analyst with Giga Information Group Inc., in Santa Clara, Calif.
In the last year, Intel, of Santa Clara, has had to recall nearly 1 million motherboards as well as the 1.13GHz Pentium III chip.
It also scrapped plans for the Timna processor with its integrated graphics, blaming cost issues.
More recently, Intel pushed back the launch of its long-delayed Itanium, the company's first 64-bit chip. Intel also has come under fire for pairing its chips with a costly Rambus-based memory technology, as opposed to the more popular synchronous dynamic RAM. Customers have balked at the cost of Rambus memory, which they argue offers little performance benefit for the price.
"Since the second half of 1999, Intel has suffered from an unprecedented series of missteps and miscues," said analyst Kevin Krewell, of MicroDesign Resources, in Sunnyvale, Calif.
Adding to Intel's troubles, sales of the Pentium 4, introduced in November, are falling well short of projections, sources said.
While Intel has privately projected sales of 2 million units this quarter and 20 million for the year, sources said actual sales are running at half that rate.
"You could tell, even before it came out, that there really wasn't going to be much demand for it," said Dan Niles, a market analyst with Lehman Brothers, in San Francisco. "The chip doesn’t perform all that much better on most software than a 1GHz Pentium III, except on streaming media applications."
Intel declined to comment on specific unit sales, although a company spokesman, Howard High, said the migration to Pentium 4 is occurring more quickly than the company had projected.
Time for something dramatic?
High also defended the company's efforts to expand into new markets, such as communications.
"If we stayed where we were at, we felt that our growth potential was going to be seriously hindered," High said.
Several analysts agreed with that perspective but faulted Intel's approach.
"I think that they've been basically sticking their toes in the water and dabbling around rather than taking the big plunge," said analyst Drew Peck, of S.G. Cowen Securities Corp., in Boston.
Intel has bought mostly small companies that proved to be a poor fit, Peck said.
"The semiconductor companies that they’ve been buying up until now have been these high-flying, relatively small communications-oriented companies that are still very much entrepreneurial," Peck said. "And as soon as they buy them, all the real talent drains out of them."
"I don't think Intel has proven themselves to be a player in the communications market, and I think that should be their primary goal," said Lehman's Niles. "I think they need to do something dramatic, like acquiring Qualcomm or Lucent's microelectronics division, before anyone takes that part of their business seriously." |
