Jules,
Did you see Michael Cummings post from 10/28/97 below? Perhaps, unfortunately, that is all the good press the acquisition will get.
Lee
To: Paul Engel (38167 )
From: Michael D. Cummings Tuesday, Oct 28 1997 10:29PM EST
Reply #38196 of 38698
Hi Paul, Article...Analysts applaud Intel/Digital deal..
zdnet.com
Analysts applaud Intel-Digital deal
By Margaret Kane, ZDNN
10.28.97 9:00 am ET
Digital Equipment Corp.'s sale of its semiconductor manufacturing facilities to Intel Corp. met with wide approval from industry analysts, who painted the deal as a win for both sides.
The sale gives Intel control over Digital's Hudson, Mass., facility in return for $700 million plus additional, unspecified, fees. Intel will take over manufacturing of Digital's 64-bit Alpha processor, while Digital agrees to support Intel's own 64-bit processor technology, the first implementation of which is code-named "Merced."
The deal allows Digital to unload a manufacturing process that had been losing money. And although Digital officials took pains to mention their continued support for Alpha and for the OpenVMS operating system, the deal gives Digital a way to "gracefully exit" that business at some point in the future.
"Those are the ingredients of a graceful exit, when you don't have to say we give up," said Mike Feibus at Mercury Research in Scottsdale, Ariz. "There have been a lot of questions over how long is Digital in it with Alpha. The answer is, it doesn't matter, there will be high-end hardware."
Analysts said the Hudson, Mass., manufacturing facility had become an albatross around Digital CEO Robert Palmer's neck, draining money from the company at a time when it could least afford it. With the costs of semiconductor manufacturing reaching into the billions, Intel is one of the few companies that can afford to be in the business.
Although most analysts agree that Alpha is a superior technology to what is currently out there, the chip never made a major mark upon the industry. Under the terms of the deal, Digital has agreed to port its version of Unix over to the Intel technology, and agreed to support Microsoft's Windows NT operating system on the Intel technology as well. Palmer said in a conference call today that the company would look at whether it would be able to port Digital's OpenVMS software to Intel's IA-64, but he didn't give a firm answer.
"Digital Unix users are faced with the same choice that HP Unix users are faced with - namely, they can stay with PA-RISC, but down the road have they to move over to the IA-64 platform. But they do have a path to go forward, on. And NT users have the same choice with Digital, to go with either processor," said Peter Lowber, principal analyst with DataPro Information Services Group, a corporate consulting firm in Delran, N.J. "VMS users don't have anywhere to go should Alpha not have a future. And while Digital says Alpha does have a future, not everyone is convinced of that."
The deal also looks good from Intel's point of view. It gets a new facility at book value, although it will have to spend some money revamping it. More importantly, it gets to settle a patent lawsuit with Digital that had the potential to cause serious damage.
"Intel gets easy access to add capacity. To the extent that there are some innovations in Alpha which can be transferred to Merced, that's an added benefit," said Vadim Zlotinikov, analyst at Sanford C. Bernstein in New York. "Most importantly, it cleans the legal slate."
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Since this wasn't written as well as your and Jules piece, are you sure it wasn't the first draft. :-)
Michael
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