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Strategies & Market Trends : The Thread Formerly Known as No Rest For The Wicked -- Ignore unavailable to you. Want to Upgrade?

To: kathyh who wrote (56645)	9/1/1999 11:10:00 PM
From: Jane4IceCream	Respond to of 90042

Forget Cramer v. Cramer......... Cramer v. Lukester! Janebug

To: kathyh who wrote (56645)	9/2/1999 12:09:00 AM
From: Tim Luke	Respond to of 90042

Wednesday September 1 10:36 PM ET Intel Introduces New Internet Chip By DAVID E. KALISH AP Business Writer NEW YORK (AP) - Intel Corp. (Nasdaq:INTC - news) is making a big move into the fast-growing Internet networking business, signaling trouble for some smaller rivals. Intel unveiled a new chip on Wednesday to power the equipment that routes information across the Internet. The move is an ambitious bid by the world's largest maker of microprocessors to expand beyond its core business of making chips for personal computers. Intel's new ''network processor'' is intended to replace more expensive chips as the brains of switches and routers that shepherd data through corporate networks and the Internet. The move prompted Wall Street investors to reconsider some smaller companies that compete in the space. Shares of network chips supplier MMC Networks Inc. (Nasdaq:MMCN - news) dropped 13 percent, down $4.121/2 at $26.75, in trading on the Nasdaq Stock Market. MMC also was hit by a decision Tuesday by IBM, a major customer, to stop selling networking equipment and focus on selling chips and other parts. Intel, meanwhile, rose 2 percent Wednesday, up $1.25 at $83.433/4. IBM, for its part, is aggressively defending its sales of networking chips. The company plans to announce Thursday a new family of networking chips that it will start selling to makers of communications equipment, including Nortel Networks Corp. (NYSE:NT - news) and Alcatel, of France. IBM also formed a new research and development unit devoted to improving its chips. And the company is spending $100 million on a new unit to boost sales to communications equipment makers, according to a source close to IBM. An IBM spokesman declined to comment. Intel has good reason to want to expand its chip business. While sales of desktop PCs continue to rise, demand is slowing. Intel's unit sales of chips are increasing only about 10 percent a year, less than half the growth rate of just four years ago. At the same time, the average price Intel charges for computer chips has dropped sharply as a result of industry price wars. To help buoy the company's profits and sales, Intel is pushing to sell more lucrative chips, such as those used in powerful business machines at the hub of computer networks. Wednesday's move into networking chips is the latest such foray to augment its PC business. ''This is simply further evidence of Intel's scramble to diversify,'' said Drew Peck, a financial analyst with Boston-based Cowen & Co. ''It's just one relatively small element of a much bigger effort at Intel.'' Intel, by far the largest chip maker with $26 billion in sales last year, is seeking to exploit its size. Intel can keep prices low because of its large-scale manufacturing operations, a strategy that has helped the company get its microprocessors into 90 percent of the world's personal computers. Intel said it already has lined up several major customers of its Internet chips, including network equipment makers Cisco Systems Inc. (Nasdaq:CSCO - news), Newbridge Networks Corp. (NYSE:NN - news) and Cabletron Systems Inc. (NYSE:CS - news) Intel also said it would invest $200 million in small companies that are developing products using the chips. The company stressed that its new ''IX Architecture'' system would help makers of networking equipment easily add new features. Intel's new chip design ''will help customers deliver faster and smarter networks on Internet time,'' Mark Christensen, head of Intel's Network Communications unit, said in a statement. The unveiling was part of a flurry of announcements by Intel at its annual conference for developers this week in Palm Springs, Calif. On Tuesday, Intel unmasked its Coppermine Pentium III processor, an enhanced version of its high-end PC chip, to be released in October. It will operate at a speed of at least 700 megahertz. Intel also demonstrated its much-touted Merced chip for powerful business machines, which the company has been developing with Hewlett-Packard Corp. and intends to start shipping in volume by the middle of next year.