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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: Scumbria who wrote (105435)	4/14/2000 9:53:00 AM
From: Scot	Read Replies (2) \| Respond to of 1573857

Scumbria and Thread, forbes.com Interesting article on ntel (part 1): Intel: Elephant In A Tutu* By David Einstein Given Intel's history as a monolithic giant focused on one thing--microprocessors--the thought of it dancing the Internet dance conjures up the image of an elephant in a tutu. Yet the giant chipmaker is proving surprisingly nimble as it twirls its way through the new economy. Taking a page from the Cisco playbook, Intel (nasdaq: INTC) has spent billions of dollars on acquisitions to expand beyond the PC chip business, which turned it into one of the most influential companies in the world. And some analysts wouldn't be surprised if it pours an additional $10 billion into its buyout binge this year to strengthen its positions in the markets for communication and networking equipment. That's not to say, however, that the Santa Clara, Calif., company which brought us the Pentium is turning its back on its main business. As long as the PC market continues to grow the way it has for the past decade, Intel will be right there with the newest, fastest, most expensive chips money can buy. And right now, demand for semiconductors appears so strong that Intel has boosted capital spending for this year to $6.8 billion--twice as much as it spent last year and significantly more than the $5 billion it announced in January. Intel's fortunes have never been better. Its stock recently hit an all-time high of $145 per share, and it's coming off a fourth quarter in which it reported record revenue ($8.2 billion) and per-share earnings (69 cents). Yet despite its 80% share of the market for PC chips, its $29 billion in revenue last year and its grotesquely high gross profit margins, which hit 61% in the fourth quarter of 1999 (most PC makers would settle for 25% margins), Intel faces more uncertainty today than at any time since the mid-1980s, when the memory market collapsed and forced the company to turn its attention to microprocessors. To put it in perspective, think of Intel as a medieval knight fighting a duel on a rampart. The enemy before it is the Black Knight, aka Advanced Micro Devices (nyse: AMD). These two have fought before, but each time Intel easily won, throwing AMD into the moat. But this time the outcome could be different. AMD has its own Excalibur, a chip called the Athlon that is just as fast and just as powerful as Intel's vaunted Pentium III. So Intel appears to have its hands full, and there's no guarantee that in the end, AMD won't end up with part of Intel's empire. While Intel is valiantly waging that battle, the company must also negotiate the battlement itself, dodging flying artillery that looks a lot like Web appliances while avoiding other combatants out to lop off its head with sharp embedded communications chips and razor-thin optical wire. This is the new computing landscape, and to navigate it Intel has padded its own quiver with some interesting weapons. In just the past year or so: It paid $1.6 billion for DSP Communications, a maker of products for digital cellular phones. It coughed up $2.2 billion for communications chipmaker Level One. It acquired Giga, a Danish maker of optical networking chips, for $1.25 billion. Intel also announced in January that, like everybody else even faintly connected to the computer business, it is planning a Web appliance--a non-PC device using the Linux operating system that consumers can use to surf the Web and buy stuff. Speaking at the Louvre in Paris last autumn, Intel Chairman Andy Grove described Intel's strategy: "One of the basic beliefs that we have at Intel, and a lot of our partners in industry have, is that in some years' time there won't be any such thing as an Internet company. There will be companies that use the Internet in part of their business operations, or they won't be existing as viable, energetic companies operating in world commerce."