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Technology Stocks : Rambus (RMBS) - Eagle or Penguin -- Ignore unavailable to you. Want to Upgrade?

To: Scumbria who wrote (48696)	8/2/2000 2:36:01 AM
From: Don Green	Respond to of 93625

Intel (Money) Inside A Slew Of Companies Aug 01, 2000 (Tech Web - CMP via COMTEX) -- What happens when a company with an avowedly “paranoid” culture puts a multi-billion-dollar cash horde to work? In the case of microprocessor giant Intel (stock: INTC), the company spreads the money like high-tech fertilizer in an information-age garden. "For them, cash is cheap and technology is dear," explained Jonathan Joseph, an analyst at Salomon Smith Barney. Intel Capital's portfolio of more than 450 companies, valued at $7.5 billion as of July 1, ranges from Absolute Software to Zygon Systems. Some of the well-known companies in which Intel has a stake: CMGI (stock: CMGI), Red Hat Software (stock: RHAT), Broadcom (stock: BRCM), Inktomi (stock: INKT), and Covad Communications (stock: COVD). The company also goes beyond passive investing and buys companies outright. On Tuesday, Intel snared Los Angeles communications software company Trillium Digital Systems for $300 million in cash and stock. That deal, intended to boost Intel's networking chip business, follows the acquisition of Basis Communications for $450 million in cash and assumed stock options in March. Basis makes network processing chips, which act as traffic cops for data. In October, Intel bought another communications chip company, DSP Communications, for $1.6 billion. What's at the root of Intel's strategy? Analysts say the company has a two-tiered plan. At one level, Intel wants a good return on its passive investments. "First and foremost, the investments have to produce," said Rob Enderle, vice president at Giga Information Group. In the cases where the stock is publicly traded, sometimes that's "a foregone conclusion," he noted. News that technology leader Intel is taking a stake can levitate a company's share price on its own. The other criterion is that the investment helps grow the market for "Intel's existing or future products," Enderle added. The Trillium, Basis, and DSP purchases were designed to help Intel grab a piece of the market for mobile devices. Intel took a stake in Broadcast.com, later bought by Yahoo (stock: YHOO), because its broadband programming helps drive demand for more powerful computers and microprocessors. The stake in Red Hat ensures that Intel won't be locked out of the emerging Linux market, Enderle added. Investments in leading-edge memory-chip designer Rambus (stock: RMBS) and Japanese memory chipmaker Samsung secure access to their production. Overall, the investment program is designed to offset slowing growth in the PC microprocessor market. "It will take quite a while, but eventually we'll see an impact," Joseph said. "It's going to take some years." The investment program was created during the tenure of former chief executive Andy Grove. Grove's book about his years at Intel's helm is titled, "Only the Paranoid Survive." The book describes key points in Intel's history when it came close to ceding its leadership position, most notably in 1985, when Grove and then-CEO Gordon Moore made the wrenching decision to exit the memory-chip business and focus on microprocessors. Mindful of Intel's painful growth, Grove, now Intel's chairman, decided it was wise to hedge his bets and invest money outside Intel. Thus an executive's fear of dropping the ball intersected with a ton of money. "It's part of his paranoia," Enderle said.