Thread, here's an interesting interview with Craig Barrett
I liked the first part, especially. As it turns out, Intel is one of only three companies in the world who have shown a profit of $100 million per quarter continuously for the last 10 years.
dailynews.yahoo.com
One of Three
NewsFactor: How do you feel about Intel's current financial performance?
Barrett: In the current economic climate I think I’m okay with the results. I had someone just look at the past decade to find out how many companies had been successful in avoiding a loss by standard GAAP accounting procedures -- you know, not pro forma but standard procedures -- how many companies had shown a profit of $100 million a quarter continuously for the last 10 years? It's a trivia question. The answer is three. Do you know who?
NewsFactor: Dare I ask?
Barrett: (laughing) Well, you know who one of them is. I wouldn't have raised the topic if Intel were not one of them.
NewsFactor: Okay, Intel’s one. How about Microsoft?
Barrett: Nope, GE, and the largest retailer.
NewsFactor: Wal-Mart.
Barrett: Right, Wal-Mart. So that's $100 million per quarter over the last 40 quarters -- 10 years. So, we feel good about that. You know, we feel good about the fact that we gained some market segment share back last quarter. Our new technology is coming out -- the 0.13 micron stuff -- so the R&D investment seems to be paying off. But it's difficult to feel too positive with the economic climate as it is. No one knows what's going to happen.
On the Technology Horizon
NewsFactor: What is on the horizon for Intel from a technology standpoint?
Barrett: I think there's a lot of excitement for the future. The 0.13 micron technology is in place at three factories right now, with a fourth one getting ready.
NewsFactor: Where are those factories? Are they all U.S.-based?
Barrett: The three that are up and running are all U.S.-based. There's a fourth due to come up that’s also U.S.-based; then, we'll be taking our Israeli and Irish facilities in that direction, too. Basically, we move all our mainstream factories ahead with each generation of technology.
NewsFactor: Are you looking forward to diversifying away from PC-related technology? Do you see such a move as being profitable, and in what time frame?
Barrett: Well, we have, really, four product thrusts -- two of them are historic and two of them are relatively newer. The two historic product thrusts are standard chips for PCs and chips for servers. That's standard Intel architecture, both 32- and 64-bit.
The third product thrust is integrated circuits for handhelds, and that includes everything from pocket PCs to cell phones to combinations of those two things. And there we make flash memory chips; we make microprocessors that go into those devices. For example, Microsoft just launched a major upgrade to Windows CE for Pocket PCs.
'StrongArming' the Competition
Barrett: Essentially, every major manufacturer’s hardware device is using one of our StrongArm processors. Most handhelds and cell phones use our flash memory chips.
NewsFactor: You might want to change the name of that "StrongArm" processor.
Barrett: (laughing) We did. The next generation is called X-Scale.
NewsFactor: When will that transition take place?
Barrett: Well, we bought Digital Equipment a few years ago, and it came with the first generation of the StrongArm processor. We're basically in the process of introducing the second generation of that -- that's the X-Scale processor. In '02, you’ll see that come out.
Networking Components
NewsFactor: So, then, what's the fourth product thrust, or the second of the newer ones?
Barrett: That's components for networking, and that includes a wide variety of products -- everything from network processors, special processors that handle data and wire line speeds of 1 GB, 10 GB, 40 GB -- and then all the interface chips, that interface you to transport media.
NewsFactor: Who would be your competitor in that area?
Barrett: Competition would be smaller companies like AMCC, Broadcom -- a series of those smaller communications-focused companies.
NewsFactor: And they're not used to having this kind of heavyweight contender in their game, are they?
Communications Recession
Barrett: I think the biggest environmental factor there right now is that that whole part of the market is pretty depressed. We liken ourselves in the communications space to a couple of big players and then a series of smaller players. The bigger players are TI, which is very big in the handheld area, and we compete with them, Motorola and Lucent, or Lucent networking gear. And then there are the Broadcoms and the Globespans and others.
But the real issue there is that the communications marketplace is in probably a deeper recession than the computer marketplace at this stage -- and that's primarily driven from the fact that telecom spending by the RBOCs (Regional Bell Operating Companies) and the other people who put in infrastructure lowered their capital expenditures, capital investments.
That's why you see that the suffering has gone from the Qwests and the Verizons and the Bell Souths and those guys that cut back their spending. That’s impacted the Lucents, the Nortels, the Ciscos -- those are Intel customers -- and then that's impacted the components suppliers, including Intel.
NewsFactor: Do you see the communications sector having a longer recovery requirement than PCs?
Barrett: Yes. I think that part of the business had a dramatic increase in capital expenditure in '99 and '00, and it's fallen off dramatically. Most people are forecasting that it's going to take at least a year or two for that to recover.
I think the computer marketplace has pretty much stabilized, and the question is, when does consumer confidence come back to pump it up again? When do consumers start buying? When do companies feel that the economy is strong enough that they'll start doing new business?
One (the PC business) has stabilized and the other (networking components) is, if not quite in free-fall, in decline.
In Part 2, Barrett will talk about what "Intel Inside" means to his company -- and to his competitors.
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