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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: The Duke of URL© who wrote (93064)	11/25/1999 3:41:00 AM
From: Process Boy	Read Replies (1) \| Respond to of 186894

Duke and Thread - Article about Intel's VC arm. upside.com "With its size and penchant for investing as much as $10 million per round in multiple rounds of financing, the company can provide a big boost to tech startups. In fact, with a staff of more than 100, Intel has one of the largest venture capital operations in the world." PB ====================================================================== Intel Has a VC Inside Inside November 25, 1999 by Loren Fox It's no secret that Intel (INTC), the largest semiconductor maker in the world, has cast its eye beyond the personal computer that has fueled its dominance. What's less well known is that Intel's large venture capital arm has long been investing in companies that stretch computing beyond the PC. Intel's $4.8 billion venture capital portfolio, with stakes in more than 300 companies, has become increasingly focused on next-generation Internet infrastructure and content companies. In fact, by mid-October, it had already concluded more than 150 deals, and the company expected that by the end of 1999 it would have invested more than the $800 million it doled out the preceding year. With its size and penchant for investing as much as $10 million per round in multiple rounds of financing, the company can provide a big boost to tech startups. In fact, with a staff of more than 100, Intel has one of the largest venture capital operations in the world. Thus, its investment strategies can influence the direction of high-tech markets. "The question we always ask is, What kind of strategic intent does this deal satisfy?" says Leslie Vadasz, senior vice president and director of corporate business development, who oversees Intel's venture capital activities. Extending the PC. Intel's business and the state of the computer industry in general have made stimulating the use of the PC central to the company's investment strategy for most of the 1990s. For example, a few years ago Intel developed the MMX chip for multimedia capabilities and the AGP architecture for graphics interfaces on chip sets. Not surprisingly, Intel has invested in companies such as Avid Technologies, a provider of digital audio and video technology, to support these technologies. The result has been a big improvement in PC graphics. "We moved the market to a much more robust visual-computing capability," says Vadasz. Beyond the PC But Intel is now diversifying far beyond the PC—and so are its investments. The company is pursuing a strategy similar to the one it adopted for its PC-visuals efforts; however, now the focus is on networking. A key element was the August acquisition of network chipmaker Level One Communications for more than $2 billion in stock. This led to Intel's new networking effort, dubbed Internet Exchange Architecture (IXA), which features reprogrammable chips for switches and routers. To support IXA, Intel created its venture capital fund, the $200 million Intel Communications Fund. The first investment Intel made out of this fund (in September) was in Trillium Digital Systems. Trillium, which produces communications software, will optimize its products for IXA. "This was the first example of a company that is going to take advantage of IXA," explains Vadasz. Supporting the PC Intel is also investing in companies that will support its planned ITanium chip, the 64-bit processor that's expected to start shipping in the middle of the year and will be geared initially for high-end servers and workstations. To that end, last May Intel created the Intel 64 Fund, a $250 million venture fund that includes roughly $150 million from outside investors such as Dell Computer and Morgan Stanley Dean Witter--the first time Intel has raised money from outsiders. The Intel 64 Fund has already made a number of investments, mostly in companies developing software for use with the ITanium chip. Vadasz, who was one of the original employees when Intel was founded in 1968, is confident of the continued relevance of the PC. "For the foreseeable future, I see the PC as the main device for access to the Internet," he says. However, he also recognizes that the PC market is fragmenting into different business models, including free PCs and cheap computers that do little but access the Internet. "There will be a diverse set of price points and configurations," he says. Whatever the future holds, Intel's venture arm will be there--and probably earlier than Intel's main business. Says Vadasz, "Our investment activities try to lead our business strategies. In many ways, it's a window into new technologies."